Having started the year with a flurry of growth, southbound Asia to East Coast South America (ECSA) container volumes have slunk backwards, with new carrier agreements only adding to the oversupply and putting severe downwards pressure on spot rates, according to Drewry Shipping Consultants.
Following first-quarter growth of 7.2%, container volumes on the southbound Asia to ECSA trade deteriorated alarmingly in April and May. Statistics from Datamar show that southbound box volumes fell by 7.2% year-on-year in April with May traffic slumping by 16.5%. The net result is that after five months volumes are marginally down on the same year-to-date point in 2014, down by 0.2% to 598,000 TEU, Drewry reports.
The slowdown was perhaps inevitable given the weakness of the Latin American currencies against the U.S. dollar and the recessionary state of the regions’ largest economy Brazil, says Drewry.
The weakness of the Brazilian economy is demonstrated in the container flows from Asia, which have dragged down the ECSA total. Year-to-date Asia-Brazil traffic was down by 3.6% to 443,000 TEU after five months, whereas Asia-Plate (Argentina and Uruguay) was still ticking along nicely, up by 10.7% to 155,000 TEU.
Drewry’s rolling 12-month average for total Asia-ECSA volumes indicates that the trade will remain in deficit for the remainder of the year as it is currently tracking at around -4%, with that strong first-quarter merely providing a temporary lift.