Drewry: Transatlantic Trade Buoyant on Westbound Growth

For years the sleeping dog of container trades, the Transatlantic is now waking up as strong westbound traffic is attracting new services, the UK-based shipping consultant Drewry reports.

The Transatlantic westbound trade continued to motor along in the first quarter with volumes rising by 8.4% against the same period last year.

The latest figures build on growth of 8.4% recorded for the full-year 2014 and it looks good for similar growth this year thanks to the rapidly appreciating US dollar, says Drewry.

It should be noted that growth comparisons will get tougher in the fourth quarter, which will subdue the full-year rise, Drewry says. Some of the stellar 13% year-on-year growth witnessed in the last three months of 2014 was the result of Asia to US cargoes being transhipped via the Atlantic as a means to circumvent tight space on direct Asia to USEC services, something that won’t be repeated this year barring unforeseen circumstances.

The shifting currency exchange is inevitably hurting eastbound box traffic. Having lifted barely a single extra container in 2014, first-quarter 2015 volumes slumped by 5.8%. During the first three months of the year, North Europe-bound freight from the US decreased by 7.6%, Canadian exports to North Europe fell by 5.7%, while Mexico-origin traffic was up by 3.0%.

Based on the same rolling monthly averages, as of the end of March there are 1.42 containers transported in the westbound for every one eastbound. That compares to a ratio of 1.28 to 1 as of the same month last year.

The surge in westbound traffic has spurred carriers to introduce additional capacity, including the Ocean Three Alliance, 2M, Hapag-Lloyd and Atlantic Container Lines. ACL is replacing its aged ro-ro/containerships from this summer, doubling its weekly slots from 1,850 TEU to 3,800 TEU. ACL is long-established in the niche market and is likely to fill its additional slots by expanding into the southern US market, says Drewry.

With westbound ships currently full spot rates are rising, although typically for the trade, only by a modest margin. Drewry’s Container Freight Rate Insight reported that spot rates on the route from Rotterdam to New York increased by 2% in April to USD 1,930 per 40ft container.

Drewry predicts that the Transatlantic westbound trade growth has been stronger than expected and future volumes should be sufficiently strong to keep up with the additional supply, helping keep spot freight rates buoyant.