Europe’s container imports shrink as recession returns

7/9/2012

Imports of containerised cargo into Europe shrank in May as the region’s debt crisis worsened, leaving carriers struggling to impose another round of freight rate increases.

Latest figures from Container Trades Statistics underline the uphill challenge faced by lines as they try to rebuild their balance sheets at a time when one of the world’s most important economic regions is sliding back to recession.

Volumes from Asia to Europe fell by 6.9% in May, compared with the corresponding month a year earlier, to just over 1.1m teu, with shipments to the western Mediterranean particularly hard hit. The May dec line followed a 3.2% drop in April and flat numbers for the first quarter.

In 2011, Asia-Europe volumes rose 4.5% although CTS recorded a 4% drop in liftings last November. Prior to that, monthly numbers had not fallen since February 2011 when there was a 9.5% drop.

Volumes from Asia to western Mediterranean and North African destinations fell 14% in May to 214,400 teu, according to CTS, following on from a 9.7% slide in April. To eastern Mediterranean and Black Sea countries, Asian exports shrank 13.5% in May.

Transatlantic services are also being hit by the eurozone’s economic troubles, with weak consumer spending contributing to a 10.8% fall in container shipments from North America in May to 232,800 teu. That followed a 12.5% fall in April.

Although volumes are declining at a time of year when lines would expect to see healthy increases in the run-up to the traditional peak season, ocean carriers are still managing to ratchet up freight rates. The Asia-Europe price index published by CTS rose to 104 in May, compared with 99 in April and just 62 at the end of last year before lines embarked on ambitious rate restoration programmes. The index is based on the 2008 quarterly average equalling 100.

More recent price data shows that lines were able to obtain further rate rises at the beginning of July after mostly postponing peak season surcharges pencilled in for June.

The latest World Container Index gained ground over the past week as the Shanghai-Rotterdam component rose $409 per feu to $3,521 from $3,112 a week earlier. Rates on the eastbound leg were also firmer, rising by $141 per feu over the week.

However, the latest Shanghai Containerised Freight Index, which is compiled differently, showed some signs of weakness with the China-Europe element losing $60 per teu over the latest seven days. Most other routes that together comprise the index were also marginally weaker.

Whether lines can sustain the price momentum in the face of cargo weakness on such a critical route as the Asia to Europe corridor will probably determine their financial fortunes for 2012.

The outcome of this juggling act could go either way, with Drewry forecasting that lines may produce collective profits of up to $1.8bn this year if they are able to avoid any backsliding, after losing an estimated $6bn between them in 2011. But should any cracks emerge in the drive to restore their finances, then there is a risk of another year in the red, with Drewry warning of potential industry-wide losses of as much as $1.3bn.