Drewry: Asia to Oceania Rates Rebounding

Asia to Oceania rates are picking up again after a mid-year lull as carriers better balance supply with demand, according to the UK-based shipping consultancy Drewry.

Total southbound container traffic from Asia to Oceania was very strong in the third quarter, rising by 9.1% year-on-year to reach 693,000 teu, according to data derived from Container Trades Statistics.

All of the growth came from the Australia market, which increased by 10.8% to 596,500 teu – boosting its share of the total volume to approximately 86% – while the much smaller inbound New Zealand and South Pacific legs fell back by -0.1% and -3.7% respectively, Drewry said.

The biggest rise in southbound traffic during the third quarter originated from Southeast Asia, which jumped by 17% y/y to 219,000 teu. Growth from Northeast Asia was more modest at 5.8% but it remains over twice the size at around 474,000 teu for the same period.

Despite some economic headwinds the trade between China to Australia continues to grow, rising by 6% y/y in the third quarter. However, Drewry said that it is growing slower than from other North and Southeast Asia countries that collectively boosted volumes by 10.1% and 20.5% respectively. China’s share of the Asian container market to Australia currently stands at approximately 55%, but that figure could well shrink if the other regions continue to expand at a faster rate.

After nine months, total Asia to Oceania volumes were up by 9.9%. The inbound Australia trade was again leading the charge with growth of 10.9% to 1.6 million teu, while New Zealand imports were some way back at 234,000 teu, up 3.4% year-to-date. Based on origin, Northeast Asia traffic rose by 6.9% while Southeast Asia jumped more than twice as fast at 16.8%.

Despite the very healthy third-quarter numbers the growth rate was below that achieved in the second quarter, resulting in a mild tapering effect to our rolling 12-month average growth rate. However, with growth of 6.3% for the NE Asia-origin trade and 16.8% for SE Asia, Drewry believes that these are certainly very welcome trends for carriers faced with far lower, and even negative, patterns in many other trades.

“Carriers in the NE Asia trade have seemingly heeded the lesson from the additional capacity introduced through the first-half of the year that dragged down freight rates by scaling back in recent months. In fact, the number of available southbound slots in both the NE Asia and SE Asia routes has fluctuating by only a few thousand teu since July,” comments Drewry.

Asia to Oceania Rates Rebounding

As disclosed, capacity in the SE Asia leg will be reduced following the closure this month of the KIX joint-service of ANL (CMA CGM) and Hanjin Shipping serving both Australia and New Zealand. The service operated with five ships averaging 2,500 teu and called Singapore, Port Kelang, Brisbane, Sydney, Auckland, Lyttelton, Wellington, Napier, Tauranga, Brisbane and back to Singapore.

Subsequently, Hanjin will leave the Asia-New Zealand trade while ANL will join the NZS consortium of APL, NYK, OOCL and PIL, replacing the out-going MOL. The NZS service is gaining a new call at Brisbane to broaden the scope to Australia. In the game of musical chairs MOL will instead take slots on three SE Asia-New Zealand services of Maersk Line.

There could also be one fewer competitor in the Asia-Australia trade soon, according to Drewry, as NYK is reportedly going to withdraw by the middle of next year. The Japanese carrier provides vessels on two loops – one from NE Asia and one from SE Asia – as well as taking slots on other services. It is understood that NYK will retain a presence in the New Zealand market.

Buoyant demand combined with static capacity has helped raised ship utilisation on the southbound trades, which in turn has given spot rates a lift.

Drewry estimates that average southbound ship load factors on the NE Asia to Oceania trade are now close to 90%, up from the mid-70% range in the second quarter when too much capacity was introduced.

Drewry’s Container Freight Rate Insight reports that Shanghai to Melbourne spot rates in October reached their highest level since March, rising by 30% against September to $1,460 per 40ft container. Despite the latest price hike spot rates between these two representative ports were around 18% lower than where they stood at the same point last year, indicating there is still much ground to be recovered.

“Spot rates from NE Asia into Australia are likely to continue to rise in the coming months as the trade enters its peak season,” the consultancy concluded.

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