Feeling the pain in Asia

The decline in Asia to Europe trade, the slower growth on the Transpacific as well as intra-Asia weakness are having a decided impact on major Asian ports as carriers continue to reposition their services in such a way as to minimise available capacity as a means to trying to get higher freight rates. However, to date this strategy has not been successful.

As Asian imports and particularly exports remain weak, carriers have begun to reduce services and at the same time calling at more ports. This strategy is hitting the transhipment ports with a particular vengeance particularly Singapore.

During 2015, Singapore’s trade declined by 9% after relatively slow growth in the previous two years. Nine of the 12 months were negative and based on projections of the next six months, four of these will show further negative growth. Hong Kong is in a similar situation with declining volumes.

The exception seems to be Port of Tanjung Pelepas in Malaysia which has managed to grow from 8.5m teu in 2014 to a projected 9.2m in 2015.

If any lessons can be drawn from these statistics it is that planning for the future at terminals is fraught with difficulties as carriers manoeuvre to minimise their costs. This is particularly true as new terminal investments come to fruition, and in an environment of excess port capacities, offer cheap rates to attract clients. Of course, the question over the longer term is whether this is a long term shift versus an opportunistic strategy to minimise costs.

Similar events are at work in Europe as well as the new terminals at Wilhelmshaven, Rotterdam and London Gateway work hard to attract mainline services with the ultra-large strings. Here we find ever larger ships moving to serve the Baltic port of Gdansk and also Gothenburg, Sweden carrying both direct and transhipment cargoes.

The conclusion that can be drawn from this is that carriers are hard at work optimising their service networks and ports won’t have much, if any, say in the matter.