Report Industry Investment Rating No relevant content provided. Core View of the Report The escalation of the tariff war may cause the Container Shipping Index (European Line) to continue its weak performance temporarily. The supply and demand situation of the European line is complex, with potential fluctuations in freight rates and market sentiment affected by trade friction and other factors. [1][4] Summary by Relevant Catalogs Overview - The weekly average capacity in October was revised down from 265,000 TEU/week before the holiday to 257,000 TEU/week, mainly due to many postponed sailings on the FE4 route. The spot market will mainly take cargo for Weeks 43 and 44 next week, corresponding to capacity supplies of 290,000 and 335,000 TEU respectively, with relatively sufficient cabin space. [4] - The weekly average capacity in November was 310,000 TEU/week before the holiday, with little overall change in the past two weeks. Currently, it is 307,000 TEU/week (excluding pending voyages), a month-on-month increase of 19% and a year-on-year increase of 8.9%. [4] - December includes 6 pending and 3 empty sailings, with a weekly average capacity of 295,000 TEU/week (excluding pending voyages). Due to many pending voyages, there is room for significant revision in the future. [4] - In the short term, considering comprehensive loading and suspension information, the reduction of empty sailings by the PA Alliance in mid - to late October reduced the pressure on shipowners to take cargo after the holiday. However, there was no significant improvement in demand in late October, so the freight rate increase in late October lacked a solid cargo volume foundation. Observe the freight rate adjustment actions next week. [4] - The trade volume between Asia and Europe (Northwest Europe + Mediterranean) in August reached 1.85 million TEU, a year-on-year increase of 11.8% and a month-on-month increase of 5.2%. The cumulative trade volume from January to August was 13.18 million TEU, a cumulative year-on-year increase of 9.7%. [4] Price - It is expected that the SCFIS European Line Index for Week 41 (October 13) will slightly decline from the previous period (1046.50 points); there is also a certain probability of oscillation. Considering that the ships of the PA Alliance with significant pre - holiday price cuts will not be reflected in this period's index but in the index on October 20. [5] - For the 2510 contract, it will fluctuate narrowly around 1100 points. [5] - For the 2512 contract, the seasonal characteristics of the European line cannot be ignored. The escalation of the trade friction will inevitably lead to market adjustments. It is recommended to treat the 2512 contract with a wide - range oscillation mindset (1400 - 1800 points), and pay attention to the unilateral low - buying opportunities brought by the tariff event next week. [5] - For the 2602 contract, due to the later Spring Festival in 2026 compared to 2025, the valuation of the 2602 contract depends more on the freight rate level in January. It is recommended to intervene in the 02 - 04 positive spread with a light position. [6] - The counter - measures taken by China against the US USTR port surcharges will have a limited impact on the European line market. [6] Demand Side - From the perspective of China's exports (valued in amount, updated to August), in August 2025, the year - on - year growth rate of China's exports in US dollars dropped from 7.2% in July to 4.4%, lower than the Bloomberg consensus forecast of 5.5%. Exports to the US continued to decline, while exports to the EU continued high - growth, and exports to ASEAN increased significantly. [26] - From the perspective of Asia's exports to Europe (updated to August), the container trade volume between Asia and Europe (Northwest Europe + Mediterranean) in August reached 1.85 million TEU, a year - on - year increase of 11.8% and a month - on - month increase of 5.2%. [4] - From the perspective of Asia's exports to North America, the container trade volume between Asia and North America in August 2025 was 2.0148 million TEU, a month - on - month decrease of 5.3% and a year - on - year decrease of 12.3%. [33] Supply Side - **Ship Schedule**: The weekly average capacity in October was revised down. The weekly average capacity in November was 307,000 TEU/week (excluding pending voyages), and December had 6 pending and 3 empty sailings, with a weekly average capacity of 295,000 TEU/week (excluding pending voyages). [38][39] - **Dynamic Capacity**: In the past week, the speeds of 8,000 - 11,999 TEU, 12,000 - 16,999 TEU, and 17,000+ TEU container fleets were maintained at around 15, 15.2, and 15.2 knots respectively. As of October 10, the number of idle ships in the 8 - 11,999 TEU, 12 - 16,999 TEU, and 17,000+ TEU container fleets was 12, 7, and 2 respectively. [50] - **Turnover Efficiency**: Analyzed the congestion situations of container ships at ports in different regions such as China, the UK/Europe, the Mediterranean/Black Sea, Southeast Asia, North America, and Asia. [52] - **Static Capacity**: From August to October, multiple new container ships of the top ten liner companies were launched and deployed on different routes. From October to December, the top ten liner companies will receive 15 new 12,000 - 16,999 TEU container ships (228,000 TEU) and 3 new 17,000+ TEU container ships. [72][74]

Core Insights - The company is actively preparing for the mid-year sales event in the U.S. and exploring the Mexican market for expansion opportunities [1] - The company primarily engages in the trade of consumer electronics, connecting U.S. retailers with Chinese manufacturers [1] - The company has been closely monitoring changes in tariffs and shipping costs, making strategic decisions based on these factors [1][2] Shipping Costs - As of June 13, shipping rates from Shanghai to the U.S. West and East Coast ports were $4,120/FEU and $6,745/FEU, reflecting decreases of 26.5% and 2.8% respectively [2] - The company anticipates shipping costs may drop below $3,000/FEU, but if they rise to $6,000, profit margins could be significantly impacted [2] Tariff Outlook - The company predicts that after the 90-day "window period," tariffs may stabilize around 40%-50%, potentially erasing profits if retail prices remain unchanged [2] - The company is cautious about the foreign trade environment and believes that ongoing policy changes require careful observation [2] Business Strategy - The company has decided to maintain current operations and not expand investments until the market situation stabilizes [4] - The company has a seven-month inventory turnover and plans to deplete this stock before making further production decisions based on policy changes [4] - If tariffs exceed expectations, the company may consider exiting the U.S. market, which is currently its largest, while the European market is significantly smaller [4] Market Conditions - The company has incurred losses due to increased costs from air freight, which added $200,000 to expenses [3] - The company is exploring e-commerce in Mexico with an initial investment of 100,000 yuan to test market viability [2][4] - Concerns about the stability of the Mexican market remain a significant consideration for the company's expansion plans [2]