Main lane trade growth to Europe has performed in line with the expectations we expressed 12 months ago.
Between January and September, total European containerized imports, excluding intra-regional cargo, grew 6 percent year-over-year to 17.5 million TEUs. This equates to an increase of just over 1 million TEUs. On a trade level, imports from Asia are up 8 percent to 11.7 million TEUs, with shipments from China having grown by a similar percentage. Encouragingly, imports from Korea and Vietnam have witnessed double-digit growth, up 11 percent and 12 percent, respectively. European imports from the Indian subcontinent and Middle East have also risen sharply, up 9 percent year-over-year to 1.8 million TEUs, with India up 10 percent and Bangladesh up 12 percent.
Can Europe emulate such performance in 2015? While many argue that the positive improvement in 2014 is primarily tied to inventory restocking rather than to a healthier improvement to the European economy, it should be remembered that when companies add goods to their stockpiles, it typically reflects optimism about future demand.
However, downside risks remain a concern. Increased geopolitical uncertainty in Ukraine and Russia, the persistent lack of any robust momentum in advanced European economies despite very low interest rates, and high unemployment figures in certain countries may pose threats to consumer demand.
The new 2015 emission control area requirements in North Europe will have significant impact on the profitability of ocean carriers operating in the area. Liner companies will have either invested in scrubber technology or intend to buy fuel with 0.1 percent sulfur content from Jan. 1, both options equally expensive.
In addition, carriers will face increased costs for buying services from third-party feeder operators whose fuel costs will also rise. Is it possible then to witness certain North Europe-destined cargo routed via the Mediterranean instead, an area still outside the ECA regulations? We believe it may present an opportunity for South European ports to see an increased portion of transshipment cargo.
Rod Riseborough, CEO, CTS Ltd.