Drewry: Asia-Med Prices to Remain Firm until Q4

Illustration; Image Courtesy: MSC

The westbound Asia-Mediterranean trade will witness firm prices until the fourth quarter of the year when the anticipated phasing in of larger ships will pressurise spot rates, according to shipping consultancy Drewry.

Headhaul traffic in the first quarter 2017 was revised upwards so that it now shows growth of 5.6%, up from the original 3% assessment. New Container Trade Statistics data for April and May shows the growth story has got even better with year-to-date volumes up by 6.9% to 2.3 million TEU.

Exports out of Asia have been evenly distributed so far this year to the Western and Eastern regions of the Mediterranean, with the latter shading it by a mere 30,000 TEU. The growth rates to the two regions were more distinct with the East Med taking the spoils again with a rise of 8.9% after five months, versus 4.9% to the West Med.

Carriers have slightly reduced the available capacity on the Asia-Mediterranean route since the April start of the new alliances, primarily through void sailings, of which there were three in May and two in June, Drewry informed. For July and August capacity will again be trimmed slightly and will be down by around 1% on the same months one year ago.

Further ahead, Drewry estimates that 10 ships in the range of 5,000-9,000 TEU will be phased out to other trades, after cascading in of six 14,000 TEU ships and four 8,000 TEU ships from Asia-North Europe by the start of the fourth quarter.

“As a result, we expect net capacity on the Asia-Mediterranean route to increase by around 1% westbound in the fourth quarter over the third, which might reduce load factors and freight rates in the traditionally slower quarter,” Drewry said.

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