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Drewry does not believe in falling prices in traffic between Asia and South-East Africa.
According to the Container Trade Statistics (CTS), container volumes from Asia to Southern Africa fell by 13% in the first quarter 2017. The latest numbers, if correct, are surprising because Drewry was expecting the trade to start recovering from its low base of 2016 on the back of South Africa’s improving economic outlook and a strengthening currency.
We are sceptical about CTS’ data as other sources suggest that trade between the two regions has been marginally stronger thus far in 2017, while the trend for rising spot rates also contradicts a declining trade story. Additionally, CTS’s figures include steep dives from North Asia (-37%) and Southeast Asia (-30%) that stand-out against a small increase from Greater China (+1.4%). Drewry will endeavour to uncover the real story by the next analysis of this trade.
Another reason we think CTS’ demand figures are understated is that carriers have resisted voiding sailings, which Drewry would be more inclined to do in a weakening market. The nine weekly services offering southbound slots were operating at very close to full-strength in April and May with only one missed sailing in each month. Forward schedules indicate that southbound capacity will edge up again in June and July, again suggesting that carriers are satisfied with the expected supply-demand balance.
Applying CTS’ demand data to our in-house capacity research has the effect of reducing the average southbound ship utilisation from the mid-80% range as of 3Q16 to below 70% as of March 2017. Again, this contradicts the direction of travel seen in spot rates along this corridor as Drewry’s Container Freight Rate Insight reported that Shanghai to Durban spot rates hit a five-year peak of $2,500 per 40ft container in May.
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