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Container Insight Weekly
Container Insight Weekly

Growth confirmation

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The numbers now prove that the Asia to Southern Africa market is growing, with spot rates at their highest in seven years.

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Since our previous analysis of this trade Container Trade Statistics (CTS) has upgraded its assessment of the Asia to Southern Africa trade for the early part of the year so that it is now more reflective of what we were seeing from other sources. Instead of a 13% decline in southbound volumes in the first quarter CTS is now reporting marginal growth of 0.4% for the same period, representing an additional 22,400 teu on the original numbers.

 

Furthermore, the growth story has improved markedly since. According to CTS, southbound shipments increased by 8% in the second quarter, the fastest rate since 2Q13. Inbound flows have grown as importers have taken advantage of a partial recovery of the rand to restock. After six months the headhaul southbound market was up by 4.3%, well on course to record the first significant annual gain since 2013. The trade did see a minor 0.6% recovery in 2015.

Figure 1: Southbound Asia to Southern Africa container traffic ('000 teu)

Figure 1: Southbound Asia to Southern Africa container traffic ('000 teu)

Source: Drewry Maritime Research, derived from Container Trade Statistics

Figure 2: 12-month rolling average of southbound Asia to Southern Africa container traffic

Figure 2: 12-month rolling average of southbound Asia to Southern Africa container traffic

Source: Drewry Maritime Research, derived from Container Trade Statistics

Indicative of a strengthening market carriers are adding capacity to the southbound trade with effective southbound slots estimated to have been up by 15% year-on-year in July. Further additions that appear on schedules for August and September will raise that annual comparison yet again.

Figure 3: Southbound Asia to Southern Africa capacity ('000 teu)

Figure 3: Southbound Asia to Southern Africa capacity ('000 teu)

The strength of the recent demand recovery has contributed to a recovery in ship utilisation and freight rates. Southbound load factors were in the high-70s in May and June and should go higher still in the traditionally stronger second half of the year, even with the extra capacity. Drewry’s Container Freight Rate Insight reported that Shanghai to Durban spot rates hit a seven-year peak of $3,090 per 40ft container in July.

Figure 4: Southbound Asia to Southern Africa utilisation v rates

Figure 4: Southbound Asia to Southern Africa utilisation v rates

Table 1: Asia- Southern Africa - estimated monthly supply/demand position

Table 1: Asia- Southern Africa - estimated monthly supply/demand position

Notes: *Based on effective capacity after deductions are made for deadweight and high-cube limitations and then again for out-of-scope cargoes, i.e. those relayed to areas outside the range. Where relevant, operational capacities have also been adjusted for slots allocated to wayport cargoes. Data subject to change
Source: Drewry Maritime Research

Our view

Freight rates should continue their ascent in this growing trade over the coming months as new capacity will be supported by greater volumes.

Industry in a glance

World Container Index

East-West composite (US$/feu)

IFO 380 Bunker Prices

Rotterdam (USD$ per tonne)

Global Port Throughput

Jan 2008 = 100

Idle Capacity

(teu)