Humbug!: Scrooge Fails To Ruin 2014 For Box Trade

Global container trade in 2014 is expected to reach a robust growth rate of around 6%. This has been supported by the recovery of the two biggest mainlane trades, as Container Commentary discussed in November. However, a number of sizeable box trades have recorded depressed rates of growth in the year-to-date, which could have stopped world container trade from expanding robustly this year.

Trades That Aren’t Delivering

The Graph of the Month shows some of the container trades which are expected to lag behind world trade growth this year. Backhaul trades, which account for some of these slow-moving lanes, are less significant drivers than their equivalent peak leg for the container market. Generally, they do not drive demand for additional ships or services and therefore are of less concern to the charter market. They also account for a smaller part of operators freight earnings giving them less bearing on the freight market. But in terms of the overall industry, these trades do have an impact on world trade and port activity. The mainlane non-peak legs present a key example of this.

Backhaul Volumes Can Add Up

The non-peak leg of the Transpacific trade is expected to contract by 1.2%, to reach 7.9m TEU in full year 2014. In volume terms this trade is almost the same size as the Asian exports to Africa and Latin America combined. The non-peak leg of the Far East-Europe trade is also a high volume trade and is expected to grow by just 1.0% this year, to reach 6.9m TEU. Together these two trades are set to represent 8.6% of global container volumes in 2014, and following a combined growth rate of 4.6% in 2013 they are expected to contract by 0.2% this year, to reach 14.7m TEU. Some analysts have attributed these poor growth figures to stricter Chinese import controls on waste products. China’s increased container inspections, introduced to identify and reject contaminated waste, have reportedly slowed imports of high-volume waste exports from the US and Europe.

Weak American Exports

A number of North American export trades have also grown slowly in 2014. As well as the current strength in the US dollar, delays experienced in recent months at congested ports on the US West Coast are also likely to have hindered the country’s exports. Meanwhile, the North-South Latin American trades, the largest of the North-South trades, are expected to grow 3.6% y-o-y to 13.6m TEU this year as Latin America’s largest economies struggle to achieve healthy growth rates. Overall, the five trades featured in the Graph of the Month are expected to account for 19% of global box trade volumes, but achieve combined growth of just 1.6% in 2014.

Christmas Boxes

These sluggish trades could have prevented world trade from growing robustly in 2014. However, the rising volumes on the peak leg mainlane trades have helped ensure that global container trade has performed better this year than in 2013, and to grow by an expected 6.1%, at the same time offering support to both freight and tonnage demand. So Scrooge has not managed to ruin 2014 for container trade. We hope you had a good year too.
Source: Clarksons