There has been a spurt in the start of the 3rd quarter in the high capacity utilisation levels on the major east-west trades. This can be attributed more to the supply-side adjustments rather than any strong demand for cargo shipping.
Alphaliner, the shipping industry analyst, informed that the average line haul capacity in the 3rd quarter has been in the mid-90% level. Only the Asia-Mediterranean routes capacity utilisation is below 90%.
As the flight rates plunged in the 1st half, the carriers introduced significant capacity cuts. This adjustment was more evident in the trans-pacific. Ocean Three partners withdrew 2 Asia-US West coast and 1 Asia-US West Coast string during June. G6 Alliance withdrew 1 Asia-West Coast string.Average weekly trans-Pacific capacity was down by 2.7%.
The weekly capacity increased in the Asia-Pacific route only by 2.3%. There has been a supply growth from the injection of new ships of capacities of 14000 20’-equivalent units to 20000 TEUs. This was counterbalanced by a reduction in the number of weekly services.
Volumes on Asia-Europe Westbound grew by 1.3% in the 2nd quarter of 2016. Eastbound trans-Pacific volumes fell by 0.7% in the 2nd quarter.
Thus, the trend is towards slowing growth in global container trade. It is worth noting that data from IMF and Drew show that the average container growth from 1992 to 2001 was 8.5%. It was 10.8% during 2002-2008. From 2010 to 2016, it was down to 5.1%.
The Hong Kong-listed parent of Orient Overseas Container Line, said that while GDP growth was uninspiring. There was muted demand for containerized transport.
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Source: JOC
