Europe's debts wreak havoc on imports, but container rates hold up

Time:2012-08-14 Browse:17 Author:RISINGSUN

THE economic crisis in Europe is having a severe impact on container shipping, with imports from Asia, North America and other parts of the world shrinking fast.


Volumes from Asia fell nearly nine per cent in June as trade to the western Mediterranean and North Africa plunged almost 16 per cent, the latest Container Trades Statistics (CTS) data shows.

Asian exports of containerised merchandise to east Mediterranean and Black Sea destinations were also much lower, falling 11 per cent compared with June 2011 figures. The corresponding figure for north European imports from Asia fell 5.9 per cent.

Overall, Asia to Europe volumes fell to just under 1.1 million TEU in June compared with almost 1.2 million TEU in the same month of 2011 and in May. The drop comes at a time when an upturn in volumes is expected at the start of the peak season.

Instead, Asia- Europe liftings have declined year on year for most months of 2012, though CTS has revised the May decline from a 6.9 per cent drop to 3.2 per cent.

After a flat performance in the first three months of 2012, the second quarter recorded a 4.7 per cent volume contraction compared with 2011.

The figures explain why several lines have taken the unprecedented decision to skip some sailings on Asia-Europe routes and postpone peak-season surcharges that are levied about now, having originally been due to start a month or so ago.

The drop in demand comes at a time of considerable capacity increases. Lloyd`s List Intelligence data shows that 800,000 TEU of new capacity was delivered in the first seven months of the year, with ships over 10,000 TEU accounting for 508,000 TEU.

Eastbound shipments from North America to Europe are also being hit with CTS data showing a 7.5 per cent drop in June after declines of 12.1 per cent and 11.3 per cent in April and May respectively, bringing the second-quarter contraction to 10.4 per cent.

Although volumes are under severe strain, freight rates are still holding up. The latest World Container Index (WCI) shows that its Shanghai-Rotterdam component gained US$163 per FEU over the past week to $3,496 as rate increases take effect.

The increase follows a dip a week earlier. But the Shanghai-Genoa route was weaker, with spot rates gaining only $22 per FEU over the previous seven days. The Shanghai Containerised Freight Index, which is compiled differently, showed a drop of $18 per TEU for its China-north Europe element. However, general rate increases on the transpacific have gained traction, with spot rates from Shanghai to the US west coast up $303 per FEU or 13 per cent.