Northbound volumes overtook the previously dominant southbound leg in September in the stagnating Europe-East Coast South America trade, UK shipping consultant Drewry said.
The trade between Europe and East Coast South America will be the most troubling of all for carriers with shipments in both directions now almost certain to end the year negatively compared to 2013.
Southbound traffic from Europe and the Mediterranean to ECSA fell by 6.8% in the third quarter, following a 6.2% slump in the second quarter, Drewry said referring to statistics data from Datamar .
The rolling 12-month average for total Europe to ECSA volumes turned negative for the first time this year in September and is unlikely to show any improvement when the numbers come in for October and November due to tougher annual comparisons. The direction of travel is better for northbound cargoes from ECSA to Europe.
Datamar reported a modest 1.2% rise in traffic during the third quarter with exports to North Europe the driver, up 3.9% compared to the same period last year.
In contrast, volumes to the smaller Mediterranean market fell by 4.4%. The steady improvement in total ECSA-Europe volume growth through the year means that the 12-month rolling average for northbound volumes finally entered positive territory – just – in September.
Interestingly, after a couple of years in the shadow of the southbound trade northbound volumes actually surpassed them in September for the first time since May 2012.
The trade is now closely matched with barely 1,500 teu separating the two legs in the month. The balancing of the Latin America trades is not confined to Europe-ECSA as Datamar’s numbers show that worldwide Brazilian exports grew by 8.5% in the first nine months, while total imports were flat.
“Despite the weak outlook for demand carriers have surprisingly not yet taken any action on the supply side. There have been no missed voyages since May, unlike in other trades when the practise has been much more widely used to pump up flagging load factors and rates. Subsequently, with no services started or suspended capacity on both legs of the Europe-ECSA trade has been virtually constant since June,” the shipping consultant said.
This led to a reduced estimated average utilisation for ships sailing southbound from Europe to ECSA for the month to 59%, down from 70% in August.
Carriers were able to maintain southbound spot rates in September despite this, although rates from North Europe subsequently fell in October with Drewry’s Container Freight Rate Insight reporting that all-in spot rates from Rotterdam to Santos declined from USD 2,230/40ft container to USD 2,090/40ft.
Northbound ship utilisation was estimated to have decreased to 87% in September, from 94% in August,However, according to Drewry, this was not reflected by spot rates, which were unchanged from the previous month.
Drewry believes that by not taking any measures to reduce Europe-ECSA capacity in a weak demand environment, carriers cannot expect to any improvement in rates in the near future.