Drewry: Asia to Middle East, South Asia Trade Sees Weak Demand

ContainershipIllustration. Image Courtesy: Pixabay under CC0 Creative Commons license

Demand revisions suggest that demand from Asia to the Middle East and South Asia is in a steep decline, according to a report from shipping consultancy Drewry.

Namely, Drewry’s Container Trades Statistics (CTS) made a substantial downgrade to the shipments data for the Asia to Middle East and South trade that erased the reported very high growth in the first quarter.

The new CTS numbers indicate that westbound trade to both regions grew by 5% instead of the previously reported rate of 16%. Moreover, demand appears to be in retreat as second quarter volumes fell by 3%.

Broken down by region, the Asia to Middle East container trade decreased by 5.7% in the second quarter to 850,000 TEU, all but wiping out the first quarter gains. Data for July continued the depressing trend, falling by 11% so that after seven months the trade was down by 1.3% year-on-year, Drewry explained.

Container trade from Asia to South Asia also experienced a deficit in the second quarter, falling by 1.4% year-on-year, as well as a decline in July. However, the depth of the fall-off in traffic was less severe that it was for the inbound Middle East route.

On the supply side of the equation, the available slots are gradually being reduced as carriers respond to the weakening trading conditions. Drewry research indicates that westbound Asia to Middle East capacity was some 5% lower in August than the same month a year ago, whereas slots to South Asia were down by 4%.

“With westbound ship utilisation levels hovering around the 60% range in both trades, freight rates have been equally weak,” Drewry said.

“The latest data would suggest that far more capacity needs to come out of these trades for any chance of a freight rate recovery.”

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