Another difficult year in prospect for Asia-Europe carriers
January 19, 2012
Container volumes in Europe and US markets are expected to face another difficult year as weak demand growth impact the major trading regions.
According to figures from analyst Alphaliner, growth on the Far East to Europe trade reached an estimated 2.8% in 2011, but is expected to weaken to 1.5% this year in the light of a weaker economic outlook in the European economies.
The Far East-US container trade declined 0.8% in 2011, compared with the 7-8% growth that carriers had estimated.
“Although economic indicators in the US are improving, demand growth on Far East-US trade is expected to rise by only 4.6% in 2012,” said Alphaliner.
With the containership fleet expected to increase by 8.3% this year, the demand-supply balance “will likely” tilt further against the carriers, “leading to and oversupply scenario that would result in further vessel lay-ups”, said the analyst.
“Both charter rates and freight rates are thus expected to remain weak throughout most of 2012.”
According to Alphaliner figures, the idle containership fleet stood at 595,000teu at the start of 2012, but could reach 1 million teu by the end of the year as carriers are forced to remove surplus ships.
“Such an oversupply situation would weigh down on charter rates for containerships, with the 3,000-6,000teu range expected to be the most affected,” said the analyst.
“Many ships in this size range are expected to be displaced by larger verssels, with no ready market to fully absorb this redundant tonnage.”
Freight rates from the Far East been relatively strong in the past three weeks, but this is now expected to weaken in the first half following the Chinese New Year holiday that begins next week.
Alphaliner noted that forward freight rates based on Shanghai Shipping Exchange futures trading suggested that market players did not expect any further rate increases on the Far East-Europe and Far East-US routes.
Courtesy of IFW
