Container traffic on the headhaul Asia-Europe lane seems to be recovering, and forecasts for 2016 have turned positive following negative growth posted in 2015, although “clear risks remain,” mostly coming from Europe, according to new analysis.
Asian container exports to Europe are projected to grow at a rate of 3.9% to total 15.5 million TEUs in 2016, with signs now indicating that “the worst could be over and that prospects for further trade growth appear positive,” said Clarkson Research Services Limited.
The dramatic contraction of container volumes on the peak leg Asia-Europe route in 2015 represented a major component of the overall weak rate of global container trade growth last year. “However, there are signs that trade growth on this key route has re-entered positive territory in 2016 so far and there are a number of factors that may support further trade expansion on the route in the remainder of the year,” said the report.
Having attained a rate of 7.4% in 2014, growth on the trade exhibited a dramatic turnabout in 2015, as box volumes contracted 3.2% to total 14.9 million TEUs in the full year, dragging down global trade growth to an estimated rate of just 2.3% last year.
Russian container imports from Asia fell 21% in 2015, to 0.5 million TEUs, accounting for 25% of the total fall in European box imports from Asia last year. But Asian container exports to other areas of Europe fell too, with imports to North Europe contracting 2%, and imports to the Mediterranean falling 1%.
The collapse in Russia’s box imports from Asia last year was clearly significant, driven by a sharp fall in Russian oil and gas revenues, which contributed to a 3.8% contraction in Russia’s GDP. But even excluding Russia, trade on the peak leg Asia-Europe route fell last year. A weak euro increased import costs for the Eurozone, where there were clear economic difficulties in a number of countries.
Additionally, European import levels in 2015 also appear to have been impacted by inventory level readjustments, as European retailers likely stocked relatively heavily in 2014, when box import growth surged, and drew down on their inventories in 2015, when import volumes fell. This could explain why Asian box exports to Germany and the UK, economies which grew at estimated rates of 1.5% and 2.2% in 2015, respectively, contracted by 5% and 1%, respectively, last year, said Clarkson Research.
After falling 5.8% in the third quarter and 0.1% in the fourth quarter of 2015 year-on-year, box trade on the peak leg Asia-Europe route increased 1.2% year-on-year in the first three months of 2016, “suggesting that the worst may now be over,” it continued.
UK container imports from Asia grew 5.4% year-on-year in the first four months of 2016, although this may partly reflect a temporary boost with retailers stocking ahead of Britain’s recent “Brexit” vote on EU membership. Container imports into Russia grew 2.3% year-on-year during January-April, and with oil prices falling so sharply in 2015, the severity of this impact is unlikely to be matched in 2016.
With container trade growth finally gaining traction on the Asia-Europe peak leg route, boxship utilization levels and freight rates on the trade have both reportedly improved in recent months.
Clear risks remain, though, including the implications of the “Brexit” result and a worsening of difficulties in the Eurozone, said the consultancy.
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