Economic double-whammy and softening demand add to pressure on box carriers
A slowdown in European economies and fallout from US-China trade war has upped the risk ...
North European trade growth for the year has been revised from 3.4% to 2.2%, according to August’s Global Port Tracker, supporting moves by carriers to suspend services.
The monthly analysis collates data from six major North European hub ports.
“The industry has finally awakened to the fact that things are not as rosy as it expected,” said its author, Ben Hackett, of Hackett Associates.
“What a change eight months make,” he added, noting that at the start of the year “carriers and big consulting houses projected a bumper year”.
The Loadstar reported yesterday that 2M partners Maersk Line and MSC would temporarily suspend their AE2/Swan loop due to “seasonal demand reductions”, taking 11 ultra-large container vessels (ULCVs), a total of some 210,000 teu of capacity, out of the tradelane.
Given that there is no obvious employment for them MSC’s eight ULCVs and Maersk’s three on the service will presumably be laid-up.
Moreover, the 2M also advised that its AE5/Albatross string would be blanked in the first week of October, around the Chinese Golden Week holiday.
Ocean Alliance members CMA CGM, Cosco, OOCL and Evergreen and THE Alliance member Ocean Network Express (ONE) are also to blank voyages around the holiday week. Clearly the carriers see very weak forward booking.
However, so far the 2M is the only alliance to take the radical step of actually suspending a service – albeit that Maersk and MSC prefer to describe it as a “temporary seasonal adjustment”.
The Global Port Tracker records historical data as well as forecasting cargo levels for the months where data is incomplete, along with estimated throughput for future months. According to the data, imports for North Europe hit the buffers in June, decreasing 2.6% year on year.
And the forecast for next year is not good news either for a loss-making liner industry striving to return to profitability.
“We continue to expect a mild downturn in the growth rates and possibly a mild recession,” warned Mr Hackett.
As an example, he cites recent forecasts on the German economy – the so-called ‘engine room’ of European trade – which refer to “storm clouds on the horizon” and economic growth having “fizzled out”.
Nevertheless, Mr Hackett does at least have some potential good news for carriers plying the Asia-North Europe tradelane.
“One bright spot might be that the reduction in China-US trade may result in an increase in shipments to Europe from China, as it looks for alternative markets without additional tariffs of 25%,” he said.