Analysis, trends, market movements, decision tools, globalization of transport, econometric models in logistics, transport, shipping and its industries
LOGISTICS, TRANSPORT AND SHIPPING NEWS
TRANSPORTCEO - 30/05/2018
Drewry announces that demand growth from Asia to the Middle East exceeded 26%.

Demand growth from Asia to the Middle East topped 26% in 1Q18, but just like the South Asia market freight rates continue to fall because of chronic over-capacity.

After a long period of stagnation, the Asia to Middle East container trade went into overdrive in the past few months. Westbound shipments increased by a staggering 26% year-on-year in 1Q18, according to the latest release by Container Trades Statistics (CTS) – the fastest quarterly growth rate in at least five years.


Boding well for the trade’s longer-term outlook, the recent upturn in volumes has come from a wide field.
 
Saudi Arabia, the second largest Middle Eastern importer of Asian containerised goods, increased its first quarter inbound volume by 26%, or 52,000 teu, to 227,000 teu. Intriguingly, the second largest contributor in terms of additional container imports from the Far East was Qatar, which despite last June’s boycott by the so-called ‘Arab quartet’ (Saudi Arabia, the United Arab Emirates, Bahrain and Egypt) saw its container imports from Asia nearly triple in 1Q18 to 62,000 teu.
 
Other countries to post double-digit growth in 1Q18 (ordered in size of teu) were; Iraq (24%), Iran (28%), Oman (44%), Kuwait (31%), Egypt (65%), Jordan (24%), and Bahrain (16%). The biggest importer, the UAE, increased its volume from Asia by 8% to 275,000 teu, while traffic in war-torn Yemen decreased by 21% to 8,700 teu.
 
Some of the recent dramatic growth in Middle East imports can be attributed to the low base of last year, but the region is clearly building momentum as oil prices strengthen. Even the risk of new Iranian sanctions is unlikely to significantly alter the trend. Had Iran registered zero inbound traffic from Asia in 1Q18 the Middle East region’s growth rate would still have been 14% up on the same period last year.


Trade from Asia to South Asia has for the most part been much brisker than to the Middle East over the past three years, although a relatively poor showing in the second half of last year reversed the trend. Westbound container traffic to South Asia lagged behind the soaring Middle East for the third consecutive quarter in 1Q18, but it did still register very healthy growth. CTS data reported that first quarter volume from Asia to South Asia grew by 9% year-on-year to reach 1.15 million teu.
 
However, the resurgence in South Asia container handling may be short-lived as stevedores across 12 major Indian ports are planning to go on an indefinite strike at the end of this month in a dispute over wages, pensions and working conditions. Earlier this month a four-day strike by truckers disrupted operations at Jawaharlal Nehru Port Trust (JNPT), India’s busiest container port.


Robust demand from Asia to South Asia and the Middle East has seemingly encouraged carriers to add more capacity to both trades, despite the fact that both were already over supplied and struggling with ever-decreasing freight rates.
 
Drewry research calculated that there were approximately 10% more available slots in the Asia-Middle East and Asia-South Asia westbound trades in April compared to the same month last year. Greater demand helped to raise the average westbound Asia-Middle East ship utilisation by around 5 points in 1Q18, but it was still floundering at a pitiful 65% for the period. Similarly, headhaul utilisation to South Asia only managed a small rise in the first quarter to average 68%.





The weak utilisation levels is reflected in the downwards trend for spot rates. Data from Drewry’s Container Freight Rate Insight shows that Shanghai to Jebel Ali 40ft container spot rates enjoyed a mini-revival in early 2018 on the back of renewed demand growth, but prices have since regressed to around $770/40ft as of April, a precipitous loss of 62% against the same month last year.
 
Freight rates to India have also struggled, although the year-on-year slide is less severe. Shanghai to Nhava Sheva 40ft spot rates fell to an 18 month low in April of $730/40ft, down by 27% year-on-year.







Notes: *Based on effective capacity after deductions are made for deadweight and high-cube limitations and then again for out-of-scope cargoes, ie. those relayed to areas outside the range. Where relevant,operational capacities have also been adjusted for slots allocated to wayport cargoes. Data subject to change

Notes: *Based on effective capacity after deductions are made for deadweight and high-cube limitations and then again for out-of-scope cargoes, ie. those relayed to areas outside the range. Where relevant,operational capacities have also been adjusted for slots allocated to wayport cargoes. Data subject to change


 

 

GIVE US YOUR OPINION.
Message




Data protection and cookie policy

© Premium Difusión. All rights reserved.