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TRANSPORTCEO - 06/03/2018
Room for a little one.

With full ships on only three services, the booming Asia to East Coast South America finally gets another service.

Container traffic from Asia to East Coast South America bounced back last year to register its first annual growth since 2013, rising by a very healthy 15.5%, according statistics from Datamar.

Last year’s southbound total of 1.3 million teu brought trade back to where it stood in 2015, but still nearly 200,000 teu shy of the 2013 peak. The recovery was driven by Brazilian imports, which surged by 22% to 936,000 teu, while growth to the ‘Plate’ region of Argentina and Uruguay was more muted at 3.4% to 408,000 teu. For both regions, 2017 growth was essentially the mirror opposite of what happened in 2016.

Notes: *Preliminary data; All data includes dry, reefer and tank cargoes
Source: Datamar

Notes: *Preliminary data; All data includes dry, reefer and tank cargoes
Source: Drewry Maritime Research, derived from Datamar

Source: Drewry Maritime Research

Despite the fast pace of demand growth until recently there hasn’t been a commensurate increase in capacity. The trade has existed for about two years with only three weekly services, on which a remarkable 11 different operators share space with one another. The capacity injections there have been have come via vessel upgrades, with the average size escalating by around 4% in 12 months to 9,300 teu as of early 2018.
However, the ship average has since been reduced thanks to the introduction in February of five classic-Panamaxes of ~4,000 teu by new vessel operator Pacific International Lines (PIL), which started a fortnightly loop dubbed Sino South America Service (SSA).

The introduction of the SSA means that the available southbound slots are expected to be some 3% higher year-on-year in March.

Sources: Drewry Maritime Research; Drewry Container Freight Rate Insight

The disconnect between supply and demand growth has increased the average ship utilisation for southbound Asia-ECSA voyages, which Drewry estimates has been at or above 100% since last summer. In such conditions carriers have enjoyed decent returns in the form of higher rates, apart from an inexplicable dip in July and August. Drewry’s Container Freight Rate Insight reported that representative Shanghai to Santos spot were $2,990/40ft container in February, up 25% on the same month last 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 is subject to change
Source: Drewry Maritime Research
Drewry's view
PIL’s fortnightly service is likely only the first of new Asia-ECSA services as the trade outlook remains positive and more ships could be added without destabilising the market.




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