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Global box growth in 2016 set to be the third weakest this century

Global box growth in 2016 set to be the third weakest this century

04 November 2016

Half-year trade volumes confirm a generally muted container market, Drewry reports, with the days of double-digit growth ‘long gone’

Growth of 2.8% on key global container trades is on track to be significantly better than last year but would still be the third-lowest rate this century if the first-half average is maintained over the full year, Drewry reported this week.

In the shipping analyst’s Container Insight Weekly report this week, it said two-way bi-lateral container traffic grew by just 2.6% on average in the first half of the year on the 14 trades covered regularly in its weekly reports, which represent an estimated 40% of the world total. The spread was fairly wide, ranging from a high growth rate of 9% for Asia-Oceania down to a low of -16% for Asia-East Coast South America.

Ten of the 14 trades posted higher first-half volumes, providing a net addition of around 988,000 teu, nearly half of which came from the Asia-West Coast North America trade.

“Modest as the latest growth rate may seem, it does actually represent an improvement of sorts,” Drewry noted. “Were the first-half average to maintain over the full year, it would surpass the measly 0.8% rate for loaded traffic in 2015. However, it would still be the third lowest rate this century behind 2009 and 2015  - confirmation, if it were needed, that the days of double-digit growth are long gone.”

It said carriers were adapting to this low-growth environment. “Despite the heavy influx of big new ships, they have found ways to improve ship utilisation on most trades through selective use of missed/void sailings in weak-demand months and more intensive scrapping of smaller ships to free up space for cascading of ships to new lanes,” Drewry noted.

“Our preliminary research indicates that fronthaul load factors on the main East-West trades was around 90% in the second-quarter, up from 86% in the same period last year.”

Drewry said its next Container Forecaster report would provide more comprehensive analysis of the global picture, with information on both headhaul and backhaul load factors.

“When load factors are at 90% or above, we would normally expect carriers to have more success in raising freight rates. While rates are trending upwards, their slow pace indicates that supply and demand alone is not dictating pricing and that shippers and forwarders are still the beneficiaries of predatory commercial strategies on the part of carriers.”

In conclusion, Drewry said: “Carriers are well accustomed to the slow-growth era ofsea container shipping, proving they can match supply and demand relatively well. However, it is a delicate balancing act, with very little margin for error, hence why achieving sustained pricing gains has proved to be a more difficult trick to pull off.

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