RAPIDLY expanding middle classes in Asia, with their greater spending power, are reshaping traditional trade patterns and forcing shipping lines to tear up the rule book.
Nowhere is this more apparent than in the Asia-Europe trades, which for years have been dominated by the westbound leg, as Asian exporters fed the seemingly insatiable demand in Europe for clothing, footwear, the latest electronic gadgets and a vast range of other everyday merchandise.
Cargo shipped on the backhaul route consisted largely of low-value commodities such as wastepaper, needed for packaging of the products being shipped to Europe, and the return of empty containers to factories in Asia.
Motor manufacturers were among the first to see a shift in the balance of trade, as affluent Chinese, in particular, started buying upmarket European models rather than cheaper Japanese or South Korean cars produced closer to home. Vehicle carriers that once would have returned from Europe to Asia almost empty suddenly became full in both directions.
The same trend has been apparent in the container trades, but less markedly, at least until recently. Even so, most lines have continued to construct their Asia-Europe networks on a round-trip basis, with westbound requirements dominating network planning. That reflected the fact that westbound cargo flows remained well ahead of eastbound traffic, both in terms of volume and value.
The cargo mix has always been quite different, with relatively light consumer products arriving in Europe from Asia, but heavier cargo being shipped eastbound. That would sometimes result in ships being full in deadweight terms on the backhaul voyage, although not in terms of slot capacity, and a different mix of 20 ft and 40 ft containers in each direction.
Westbound volumes remain well ahead of eastbound, with Container Trades Statistics data showing that total Asia to Europe liftings came to 14.3m teu in 2013, against 6.9m teu the other way. In the January-November 2014 period, westbound shipments totalled 14m teu, with 6.3m teu moved on the return leg.
Price differentials also remain large, with the latest World Container Index showing that Shanghai to Rotterdam freight rates are just over $2,100 per feu this week, against $814 eastbound. But whereas westbound rates remain highly volatile and on a downwards trend, with GRI spikes quickly eroded, underlying eastbound rates have been gradually improving, according to Maersk. That has increased the eastbound trade’s contribution to Maersk Line’s financial results, Johan Isbrandt Sigsgaard, Maersk Line's Europe to Asia trades director, told Lloyd’s List.
The situation is evolving so quickly that Maersk anticipates the trade could be balanced within about five years, and has taken steps accordingly to respond to this structural shift.
A separate team was established some 18 months ago to focus specifically on developing Europe to Asia services, rather than just treating them as low-margin repositioning sailings.
Until now, network planning has been driven by the demands of the westbound trade, but the 2M vessel-sharing agreement with Mediterranean Shipping Co provided the opportunity to design some loops around the needs of European shippers and their increasingly wealthy Asian customers.
These include exporters of luxury cars that often prefer more expensive vehicles to be shipped by container, plus car kits and parts, foodstuffs, and furniture, all of which are muscling out the cheaper cargoes shipped to Asia for recycling.
(Source : www.lloydsloadinglist.com)
