Container shipping was relying on a recovery in trade this year to help soak up overcapacity. But two new reports show the rate of growth is actually slowing.
Container port throughput growth is slowing as global trade is affected by the threat of US-China tariff war and Iran sanctions.
WEAK financial results from container lines can be attributed to weaker trade flows between Asia and northern Europe, and not just overcapacity and the China-US trade war, according to the latest report on northern range port throughput from Hackett Associates.
Preliminary figures indicate that total container volumes across the six-port range decreased by 60,000 teu, or 1.6%, in June compared to May with 3.8m teu, which equates to a 6% year-on-year increase.
Total imports to Europe decreased by 1.9% in June, with northern European ports showing a 2.6% decline on a year ago. Exports were up 8.9% year on year.
For 2018, loaded incoming volumes across the northern range are projected to post a 2.7% increase while loaded outgoing volumes are forecast to post a 3.3% increase.
“Our forecast this month results in a reduction in the rate of growth for the year as a whole,” said Hackett Associates founder Ben Hackett. “The Europe-wide import forecast for 2018 is down from last month’s 6.1% to 4.6%, while northern Europe is down from 3.4% to 2.2%.”
For imports to northern Europe, 2018 growth is projected to be similar to last year.
“Exports are well down on the previous year,” Mr Hackett said. “The CesIFO Group, which forecasts the German economy in depth, has warned in its latest forecast that there are storm clouds on the horizon and the economic growth impetus has fizzled. We have been warning of this for some months now and with the latest comments by forecasting institutions the penny has dropped.”
The only bright spot might be that the reduction in China-US trade may result in an increase in shipments to Europe from China as it looks for alternate markets without additional tariffs of 25”, he added.
“Looking forward to 2019 we continue to expect a mild downturn in the growth rates and possibly a mild recession and this is without taking account the mess that London and Brussels are making of Brexit,” Mr Hackett said.
The slowdown in growth in Europe corresponds with similar retrenchments elsewhere in the world.
Alphaliner’s latest global port survey of over 200 main ports revealed that box traffic expanded by 4.7% in the second quarter.
“Although volume growth remains positive, the pace of growth has slowed to the lowest quarterly level since 2016,” Alphaliner said. “Growth remains positive across all main regions surveyed, except for the Middle East which registered a 1.4% decline during the second quarter.”
Alphaliner said the downturn noted at Middle Eastern ports in the second quarter was due to the dramatic drop in Iranian port volumes that recorded a decline of 18% due to the reimposition of sanctions by the US.