Seafreight Market Update

1. Transpacific volumes at risk from trade war fallout

Container cargo ex Chinaaccounts for 68% of all transpacific volumes, based on May 2018 – Apr 2019 carrier’s volumes.
The 14 main transpacific carriers’shares of ex-China cargo is between 52% and 90% of their respective total head haul liftings. Any reduction in Chinese volumes will thus have a significant impact on the shipping lines.
Total exports from China have fallen by 6.3% in the first four months of 2019 compared to the same period in 2018.
A further escalation of the US-China trade war, including the potential imposition of new tariffs on the remaining $300 Bn of Chinese exports to the US later this year, could result a reduction in overall transpacific eastbound volumes by at least -8%. Exports from other Far East origins meanwhile, will not grow sufficiently to offset the expected reduction in cargoes from China.
OCEAN Alliance carriers have announced 3 void transpacific sailings in June, with more carriers expected to follow.
CN exports could experience a growth acceleration in the coming months due to shipment rush ahead of the next phase of threatened tariffs.

Top 14 Transpacific Carriers Eastbound Liftings:

May 2018 – Apr 2019

2. Outlook:

Asia to Europe: Carriers push for GRI (General Rate Increase).
Asia to Latin: Enter the traditional peak period to AMLA, rates are expected to increase from mid-June 2019. All carriers reported no plans to inject additional capacity to MX/WCSA/ECSA.
Asia to North America: Carriers have started to adjust capacity with blank sailings in an effort to push spot rates to sustainable levels.
Europe to Asia: Space continues to be tight. Blank sailings combined with strong commodity demand put pressure on space and container availability.
North America to Asia: Stable rates in market with some flexibility on pricing for NAC’s. Bunker component will be broken out of ocean base by Q3 for those carriers who have not adjusted the traditional all-inclusive pricing
Asia to Asia: No significant changes to the FAK rates expected.

Carrier Results:

Only six of the 11 top carriers who publish their financial results ended in the black, often with marginal net profits.

Reference: ALPHALINER

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