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TRANSPORTCEO - 21/02/2018
Trade with the Mediterranean is losing momentum.
After a dizzying start until 2017, trade between Asia and the Mediterranean slowed down in the final months of the year.
According to an analysis by Drewry Maritime Research, the traffic of boxes from Asia to the Mediterranean area ended last year with less than expected growth. Shipments in the fourth quarter increased by only 1% year-on-year compared to strong growth in the second and third quarters, as the good performance in the eastern Mediterranean region was virtually swept away by a sudden drop in imports from the Western Mediterranean.
While growth in the eastern Mediterranean continued, with an increase of 5% in the fourth quarter, trade in the western Mediterranean declined, falling by 3.4% to record the first decline in nine quarters.
Figure 1: Container traffic between West Asia and the Mediterranean (' 000 TEUs)
Despite a weaker than expected year-end, the combined East and West Asia/Mediterranean volumes reached 5.5 million TEUs last year, an increase of 4.4% over 2016.
Figure 2: 12-month moving average of container traffic from Asia to the WestWestbound Mediterranean area
The eastern Mediterranean countries that made the largest contributions to trade in the west-east direction were Turkey, Ukraine and Slovenia, which accounted for approximately 110,000 TEUs of the 150,000 TEUs imported into the region from Asia.
In Egypt, some 50,000 Asian TEUs imported into the country were lost in 2017 (out of 311,000 TEUs in 2016), as a number of IMF-imposed austerity reforms weakened consumer purchasing power, from the introduction of VAT to currency devaluation. The damage suffered by the country's tourism industry as a result of the terrorist attacks also contributed to reducing inbound shipments.
Growth in the Western Mediterranean originated almost exclusively in the three largest markets: Italy, Spain and France. These three Western Mediterranean powers all added about 105,000 TEUs in Asian imports to the region, which saw their annual net addition reduced to about 75,000 TEUs due to losses elsewhere, especially in North Africa, where Libya's incoming trade decreased by 15 per cent (to 55,000 TEUs) and Algeria decreased by 7 per cent (to 295,000 TEUs).
Figure 3: Capacity from Asia West to the Mediterranean (' 000 TEUs)
Container capacity on the West Asia-Mediterranean trade continues to increase gradually, driven by the number of larger vessels entering the market rather than initiating new services. Drewry's research indicates that the actual monthly capacity will exceed 600,000 TEUs in March, representing an increase of almost 20% over the same month in 2017.
Figure 4: Utilization rates v from West Asia to the Mediterranean
Figure 5: Shanghai to Genoa Container World Index ($/40ft container)
Spot rates for Asia-Med, as elsewhere, have experienced their usual increase following the pre-Chinese New Year. Last week, the Drewry's World Container Index reported a reference rate from Shanghai to Genoa of $1,650 per 40-foot container, an increase of about 40% from the rate in force at the end of 2017. We expect the tariffs to soften now that factories are closed for the holidays, before stabilizing for the rest of the year.
Table 1: Asia-Mediterranean - estimated monthly position of supply and demand
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