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Asian container exports to the Western Mediterranean rose by 2.8% in the third quarter.
According to a study by Drewry, the withdrawal of Hanjin tonnage has not been enough to rectify the trade’s supply-demand imbalance and headhaul ship utilisation is lower compared to other major markets.
Westbound volumes rose by 1.8% in the third quarter and the growth rate for the year to date is now registering 2.9%. Asian exports shipped to the West Mediterranean, including North Africa, grew by 2.8% between July and September, while traffic to the eastern sector of the trade only expanded by 0.8%.
By the end of September, the 12-month rolling average growth factor for westbound flows was touching 3.4%, which is a distinct improvement on the minus 1.9% recorded a year earlier, and represents the highest point it has reached since March 2015. Third quarter liftings were a fraction below those of the second quarter. In nine out of the last thirteen years, Mediterranean westbound cargo flows have been stronger between April and June.
Despite a steady rise in consumer confidence in France, Asian goods bound for the country fell back in Q3 by just over 1% after an encouraging first half (+6.1%). On the other hand, Italian households seem a lot more relaxed with imports from Asia climbing by 4.7% in the third quarter.
In the more subdued East Med market, the number of loaded containers destined to Turkey dropped by 7.1% in the third quarter, after retreating by 2.1% in the first six months of 2016. Egyptian imports decreased by almost one fifth between July and September. Only a strong rebound in imports entering Ukraine (+36% in Q3) and Greece (+25%).
Westbound slot supply, which by August was starting to grow at a rate of over 12%, has in the last two months returned to levels that existed a year ago, due largely to the suspension of the CKYHE’s MD3/HPM pendulum service to which only Hanjin vessels had been assigned. That enforced reduction of provision was not enough as ship utilisation throughout the whole of the third quarter barely rose above 80%. The temporary merging at the end of October of Ocean Three’s Adriatic (PHOEX) and Black Sea (BEX) loops as part of its Winter Programme will no doubt improve load factors, but focus is now turning to what the new alliance structures will be offering come next April.
The Ocean Alliance has unveiled five end-to-end services with two of its North Europe loaders. Two of the services will focus on the niche Black Sea and Adriatic markets, while MED1 and MED2 will essentially serve the West Med leaving MED4 to concentrate on the East Med ports. Piraeus and Marsaxlokk are selected as the Alliance’s core transhipment centres in the Mediterranean.
The Alliance will offer three end-to-end weekly. The first two loops will primarily focus on the West Med sector while MD 3 will confine itself to the East Med, including no less than three calls at Turkish ports. In the Far East, the alliance is covering only four Chinese ports at this stage. Similar to the members’ North Europe product range, it would appear the emphasis will be on fast transit times. Three Mediterranean end-to-end services do represent a major step-up for the new group’s partners: the G6 alliance - from which only three members will survive in the alliance.
The westbound spot rate market has become appreciably weaker in the Med than in the North Europe trade. During 2015, Med rates outstripped North Europe prices by an average of some $203 per 40ft. In the third quarter however, Med headhaul going rates started to lag behind those of the northern trade by an average of $274.
Towards the end of August, spot prices were drifting back to $1,000 per 40ft and, during the following month, whatever boost was generated by Hanjin’s collapse was short-lived as prices once more returned to $1,000 (and below) in October. In November, those rates had been restored to $1,300 in order to provide some support to the 2017 annual contract negotiations which the carriers are presently engaging in, but any permanent upward trend in prices remains unconvincing.
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