19 Agustus 2016

[190816.EN.BIZ] Decisive Action Needed By Container Lines To Overcome Woes: Drewry

BAD times are coming to the Mediterranean, says London's Drewry Maritime Research, noting data showing no growth in France and little in Italy and Spain as well as quarter-to-quarter eurozone expansion at half the level it was.

Things are little better on the other side of the Atlantic where current data shows the US economy growing 1.2 per cent between April and June, NewportBeach, California's Global Trade Magazine reports.

"None of this bodes well for container lines operating on Mediterranean to North America services, says Drewry.

While traffic has plateaued at 120,000 TEU on the stronger westbound Mediterranean-North America leg, this marks a drop of four per cent year on year. The eastbound leg was down 9.1 per cent year on year.

With the peak shipping season approaching, shipping lines have cut some capacity on the trade to shore up rates. But the peak season may turn out to be underwhelming this year so that "cuts may prove to be too little too late on this trade", said the report.

"The cuts saw westbound capacity fall slightly to 186,000 TEU in July. However, to put this in perspective, capacity on this leg is still up 9.4 per cent year on year.

Eastbound capacity also dipped slightly to 171,000 TEU, but this still marks a year on year rise of 9.5 per cent. Musical chairs seems to be the favoured game on this trade as shipping lines opt for tweaks of services over sharp cuts.

The result has been that utilisation on the westbound leg is stuck at around 60 per cent. Eastbound utilisation dropped to a new low in May: 35.4 per cent. Spot rates from New York to Genoa sank to US$790 per FEU in June.

"The downbeat economic outlook for the load and discharge ports on this services does not bode well for shipping lines that are not prepared to take clear action on over capacity. Decisive action needs to be taken to stem a capacity glut that will not be easily mopped up by either side of the Atlantic," said the Drewry report.

Source : HKSG.

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