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Monday, January 4, 2016

Port Traffic Grew at Slowest Rate Since Recession in 2015

Jan. 4, 2016 1:58 p.m. ET

Container traffic at the world's busiest ports grew last year at its slowest rate since the recession, according to an estimate by Alphaliner, a shipping industry data provider.

Demand was held back by a lack of "peak season," the months heading into the holidays when manufacturers normally ship large quantities of goods to retailers globally. This year, traffic in the top 30 ports sank 0.9% in the third quarter, the first decline over those months since 2009, Alphaliner said.

For the full year, Alphaliner projects container traffic rose 0.8%, the smallest increase since 2009. Weak demand has left carriers struggling to find customers to fill their ships, even as new vessels hit the seas at a record pace. Last year, ships with a combined capacity of 1.7 million twenty-foot containers entered the global fleet. To combat the lower ocean freight rates resulting from excess capacity, ship owners and operators have idled more than 1.3 million TEUs of capacity.

Ports that saw the steepest declines include Jakarta, where traffic fell 16.6% in the first nine months compared with a year earlier, and Hamburg, where traffic dropped 9.2%. Ports in New York, Ho Chi Minh City, Vietnam and Port Kelang, Malaysia saw double-digit percentage growth.

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  • Fluctuating currencies were a major drag on global trade, particularly along the Asia-to-Europe route, the world's busiest shipping lane, said Peter Sand, chief shipping analyst with BIMCO, a large shipping business association based in Denmark.

    A weaker euro reduced demand for goods from China, proving "devastating" for shipping volumes, Mr. Sand said. The Chinese yuan's value is tied to the dollar, so when the U.S. currency strengthens against the euro, it makes goods produced in China more expensive for buyers in Europe.

    "That was something European consumers did not like," he said. "In order to make 2016 a better year, we need European consumers to be more happy, and perhaps to see the yuan depreciated."

    The record level of idled capacity was also a result of weak demand, Mr. Sand said, but added that ideally, even more ships would be taken out of the working fleet in order to produce higher freight rates.

    "For a sustainable level of freight rates, we could talk about 2 million TEUs being idle," Mr. Sand said. "Owners and operators should do whatever they can to not to order new ships, and continue demolition of unused tonnage."

    Write to Robbie Whelan at robbie.whelan@wsj.com


    Source: Port Traffic Grew at Slowest Rate Since Recession in 2015

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