ClipperMaritime says carriers need to be careful how they cascade larger containerships into new trade lanes.
London-based ClipperMaritime says that container traffic from Asia to ports on the East Coast (including Gulf Coast) of North America looks like it will grow at least twice as quickly as it will to West Coast ports.
“The switch in traffic on the trans-Pacific from West to East coasts is in full swing,” the company said.
“Container volumes from Asia to the East Coast of North America surged 16 percent in the rolling 12-month period to February 2018. Clipper’s view is that full-year growth on the sub-trade could reach 10 percent again in 2018, adding another 590,000 TEUs to the trade lane this year. Rolling 12-month growth in the same period to the North American West Coast grew by 5 percent in comparison.”
ClipperMaritime said, however, that North American West Coast ports “will not just sit by and let the volume drift continue.”
It also noted the “looming East Coast port contract” between the International Longshoremen’s Association and employers that is due for renewal in late September. If the ILA and employers do not reach agreement on the issue of automation that seems to be at the center of the contract negotiations that “may yet dramatically alter the final months of 2018.”
ClipperMaritime says traffic to the East Coast has been boosted by both the widening of the Panama Canal and the rebuilding of the Bayonne Bridge in New York City so that larger ships can reach terminals on Staten Island and in Elizabeth and Newark, N.J.
“Operators are ready to upgrade in earnest from the first phase of larger 8,000 TEU ships deployed from late 2016,” the company said. “This is a huge boon for ocean carriers as they find homes for big ships released by the ongoing cascade.”
Neil Dekker, ClipperMaritime’s lead container consultant, stated: “The Ocean Alliance members have seen the light and have decoupled their Manhattan Bridge pendulum service and from this month will deploy 13,000-TEU ships on the new string. This makes sense, but it will continue to change the competitive landscape depending on how the alliances react in the future. Should all carriers move at the same time as has been the case in the past and mess up the supply/demand balance, the risk of serious overcapacity at the trade-lane level is clear.”
ClipperMaritime said capacity management is key for the container trades and that it is important for carriers to release ships “sensibly.”
“It could end badly for operators if they are not careful. One clear example is the recent redeployment of tonnage on the Asia-to-West Coast America trade, which has resulted in a crash in spot freight rates in the last six weeks.”
Dekker said ClipperMaritime’s analysis of its “newbuild and secondary cascade model shows carriers deploying future ULCVs (ultra large container vessels) into four key East-West trades.
“By the end of 2020 there will be nearly 13 weekly loops sailing from Asia to North Europe with ships of at least 18,000 TEUs,” he said. “An additional 18 ships of this size will push out vessels of between 11,000 TEUs and 14,000 TEUs into four east-west trade routes by the end of 2018. Ocean carriers are adapting to the challenge quickly as evidenced by 2M’s decision to unravel its AE6/TP6 Asia-Europe-North Europe pendulum, which means it can now upgrade an end-to-end service with ULCVs of 18,000 TEUs.”
Switch from West Coast to East Coast ports in ‘full swing’
