While the transatlantic trade was stable for the first nine months of 2019, it plunged into uncertainty at the end of the year due to factors including Brexit and the trade war, says ACL chief executive Andy Abbott.
He tells Container Shipping & Trade “The first three quarters of the year were not too bad; in the westbound direction ships to North America were pretty full up to September and there was trouble finding space at times. But the post-summer rebound was muted and now the atmosphere is one of uncertainty.”
Suggesting what could be behind this, he comments “It is probably a combination of Brexit, the trade war and a general economic slowdown that has been worsened by the first two factors. December always has a surge of cargo from people wanting to ship their product out before year-end and January always has a post-holiday lull. The true test will come in February when the transatlantic market always rebounds.”
He says “The US-China trade war has made companies nervous, and the slowdown in Asia-Europe volume has panicked the alliances. Nobody wants to lose a single container anywhere, so they overreact to the smallest negative news.”
“The westbound trade was stronger than we thought it would be for most of 2019, and it will be interesting to see how the coming months develop. Several issues are raising their head now. Some have to do with Brexit, as we have customers concerned about sourcing.”
He adds that in the other direction, North America to Europe is the worst it has ever been. “The general European economy is not as strong as it was a few years ago. There are a lot of things happening simultaneously and it is hard to say what is causing it: is there an over-riding economic slowdown or are people just nervous, postponing investment and keeping inventories low until the air clears?”
Two other events are also having an impact: cascading ships and the 2020 low sulphur cap. On the first, smaller ships on the transatlantic have gradually been replaced with 6,000+ TEU ships cascaded in from the Asian trades, negatively impacting the supply and demand balance.
Container Trades Statistics (CTS) volumes for the trade highlight the growth enjoyed in the first 10 months of the year. On the Europe to North America trade lane, TEU volumes increased year-on-year compared to 2018. They rose by 5.82% in Q1, 3.78% in Q2 and 2.39% in Q3. On the North America to Europe leg, they rose by 9.36% in Q1 2019 versus Q1 2018, 1.34% in Q2 and by 3.1% in Q3. . . . . .
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