Brexit Could Affect Container Shipping Recovery

Brexit could push back hopes of a recovery in container shipping till 2017 according to analysts Maritime Strategies International (MSI).

News ID: 66393

Date: 11 July 2016 - 10:54

According to MANA, the vote to leave the EU could have an impact on the much wider European container shipping market as whole.

The Asia – Europe trade is the largest container shipping route and the fall off in this trade from the latter half of 2015 has had significant negative impact on boxshipping as a whole.

MSI believes that the fall in volumes seen on the Asia – Europe trade was largely due to destocking of inventories which reflected the fall in the value of the euro. The UK’s Brexit vote has not only hit the value of eterling but also the euro.

“Prior to the Brexit vote, we had believed that the stabilisation of the euro would lead to significant inventory restocking in 2016, which in turn would push up Asia-Europe westbound trade growth to over 7% year-on-year in the second half of 2016,” said James Frew a senior analyst with MSI.

“This rapid Asia-Europe trade growth, and its knock-on impact on intra-Asian cargoes, is integral to our projections of the rapid elimination of idle capacity - or at least its reduction to below 500,000 teu which is the level at which we believe some pricing power shifts back to the owners.”

However, a further weakening of the Euro would push back this expected improvement of the market until 2017.

In addition to a weaker euro hitting the market, Brexit has also hit sentiment raising fears of a European or global recession.