ON A ROLL

In 2004, Drewry Shipping Consultants estimated the total size of the trade at 881,000TEUs and 2.1mTEUs respectively, with further significant growth envisaged in 2005 and 2006 (see Table 1).

Indeed, double-digit growth is expected in each of the next two years, with China, in the Far East, and the emerging economies of the eastern Mediterranean/Black Sea region, in the Mediterranean basin, being the catalysts for this strong performance (see Table 1) China has become a powerhouse in this trade, accounting for about 50% of the westbound market and close to 30% of all traffic moved eastbound in 2004. In volume terms this amounted to more than one million TEUs and about 265,000TEUs, respectively.

This compared with estimated shares of just 17% (114,000TEUs) eastbound and 33% (437,000 TEUs) westbound in 2001.

The continued outsourcing of manufacturing capacity to China by European companies, plus the huge competitive advantage that China has in terms of its labour and production costs, suggest that this trend will continue.

Currently, the main imports into the Mediterranean basin from China comprise consumer durables, garments, furniture, toys and electrical goods, with automotive components and telecommunications equipment displaying recent firm growth.

The cargo mix is slightly different in the eastern Mediterranean/Black Sea sector, with a higher volume of industrial goods, construction equipment, etc. being moved. Consequently, South Korea and ports in northern China tend to have a higher profile in the service networks maintained.

Outbound, chemicals, resins, scrap metal and materials for packaging, such as waste paper, are the main commodities moved, although there are signs that wines, foodstuffs and certain fashion goods are being shipped in increasing volumes as disposable incomes among the rising Chinese middle class population increase.

Given the strong growth in the China and eastern Mediterranean regions, it is no surprise that many of the new services launched and/or revamped over the past couple of years have involved direct calls at ports in these regions. Such developments have also been fuelled by rising levels of congestion in hub ports, particularly in the Mediterranean basin, such that transhipment and feeder services over ports such as Gioia Tauro have become less reliable and more expensive to operate.

Consequently, liner operators, including Hapag-Lloyd, Norasia Shipping Services, P&O Nedlloyd, CMA CGM and MSC, have all commenced direct Far East/eastern Mediterranean links in the past 18 months.

The most recent development involved the joint service of Norasia and Hapag-Lloyd, which became fully operational in January 2005. The so-called Asia Black Sea service (ABS), in which Norasia is contributing six of the seven 3,000/3,600TEU vessels deployed, offers direct calls at Shanghai, Ningbo, Keelung, Chiwan, Port Klang, Colombo (eastbound only), Damietta, Constantza and Istanbul.

Currently, five sailings a week are available to/from the eastern Mediterranean region, with at least one Turkish port featuring on all of the schedules. In total, the five strings deploy an annualised slots count of well over 500,000TEUs in the westbound direction (taking into account wayport calls, etc), equivalent to approximately 16% of all capacity deployed from the Far East to the Mediterranean. This is nearly double the 8.8% share deployed in January 2004.

And capacity on this trading sector will increase further with the region firmly on the radar screens of several carriers. Indeed, Zim and China Shipping Container Lines (CSCL) are starting a new joint service, with an initial fortnightly sailing frequency. Using vessels of 2,600TEUs, the new service will call at Tianjin, Dalian, Qingdao, Busan, Shanghai, Ningbo, Chiwan, Port Klang, Damietta, Piraeus, Istanbul and Constantza.

As for China, no fewer than 28 of the 36 services operated in the Far East/Mediterranean/Far East trade include direct calls at ports in mainland China, with Shanghai, the southern region of Shenzhen (Chiwan, Shekou and Yantian) and Qingdao having the greatest number of sailings each week.

Given China’s continuing economic development, the ongoing boost to its trade profile from its membership of the WTO, plus the pace with which the eastern Mediterranean/Black Sea area is industrializing and benefiting from closer integration with an expanded European Union, the eastern Mediterranean/Far East trade appears set for a sustained period of growth.