[231017.EN.BIZ] Demand on Asia-Med Trade Route Outperforms Adjacent N Europe Corridor

SHIPPING lines are deploying bigger containerships on the Asia to Mediterranean trade as it has been experiencing higher demand in recent months and greater growth than the adjacent North Europe corridor.

According to the latest addition of Drewry's Container Insight Weekly, cargo demand from Asia to the Mediterranean increased by 5.7 per cent in the first eight months of the year, but has been outstripped by the injection of new capacity into the trade, reported American Shipper.

From January to August, demand on the Asia to west Mediterranean trade route rose by 5.2 per cent, although Italy's imports were below average and French imports moving via Marseilles were lower than via northern gateway ports, Drewry said. However, the analysts pointed out that Spain remains the focal point for cargo in the region, and not just of the west Mediterranean, but of the westbound leg overall.

Over the same period, demand from Asia to the East Mediterranean grew by 6.1 per cent. Imports from Asia to Greece decreased, but the niche markets of the Black Sea and Adriatic have continued to outperform the rest of the sub regions.

"The Adriatic ports are attracting more Central European traffic - to countries such as Austria, Czech Republic, Slovakia and Hungary - away from a North Continental routing, especially as some of the larger ships may experience problems sailing up Hamburg's River Elbe," the Drewry report was cited as saying.

As a result of overcapacity and a lack of competition pressure for space on a given voyage, spot rates on the Asia to Mediterranean trade have also softened in recent months, Drewry said.

The trade is seeing bigger ships, as ocean liners are deploying 14,000-TEU newbuild ships on dedicated Asia-Mediterranean loops. As a result of cascading, the larger ships on the Asia-North Europe trade are expected to be deployed on the Asia-Mediterranean route, the firm added.

"As strong as demand has been, it hasn't been able to keep pace with the rise in capacity, with headhaul ship utilisation dipping below 90 per cent in April, although it has remained steadfastly in the high 80 percent range ever since," Drewry said.

This decline in load factors has caused spot rates to fall, with Drewry's World Container Index reporting a Shanghai to Genoa benchmark rate of US$1,322 per FEU recently, down by 30 per cent on the 2017 peak of early May.

According to the Shanghai Shipping Exchange's Shanghai Containerised Freight Index, spot rates from Shanghai to the Mediterranean stood at $652 per TEU as of October 13, and have continuously declined since reaching $883 per TEU on July 28.

Source : HKSG.