Although commodities prices have rallied from recent lows based on hopes that trade and manufacturing will recover thanks to various government stimulus plans, reports still show continuing deterioration or at best stagnation in shipment volumes.
The latest sighting, on container traffic, comes from the Financial Times. Note that containers carry higher value added goods than bulk carriers. And even though Singapore shows a decline in November, its volume for the year up to that point showed a healthy increase over the prior year.
Singapore, the world’s biggest container port, suffered last month its first fall in throughput traffic since 2001 due to a slowdown in global exports that has affected the Asian shipping industry.
Container traffic shrunk by 1.5 per cent in November from a year ago …Monthly traffic volume has been slowing since July, although total shipments have increased by 9 per cent to 27.8m TEUs through November from a year ago…
Economists believe that its container traffic will continue to decline until at least mid-2009 as the city-state is expected to be among the worst-affected Asian countries in the global recession due to its heavy reliance on exports.
Bulk carrier volumes have increased slightly reflecting the fact that China has begun to exhaust the inventories it had stockpiled. I suspect it won’t pick up fully but it does mark the end to the pricing negotiations between china and brazil on iron ore.
A container traffic slow down is not something that I have noticed in the figures for other ports so it will be interesting to see whether this is a localized affect or global. My suspicions are that this may reflect some of the announcements made by Sony and Panasonic recently. A high Yen is crippling Japanese trade and so it is sourcing less components locally through Singapore. Equally this could be a result of all the toy factories closing in China.
Via LL ($): “Macquarie Research head of regional shipping in Asia, John Windham, said there would be a 29% fall in Chinese residential construction in 2009, which he said was a key driver of freight rates.
Residential construction in China, which uses about one fifth of the country’s steel, is expected to drop to just under 400m sq m in 2009, down nearly a third on this year’s level…
“If this [residential construction] forecast is correct, then it is certainly a negative indicator for the level of average freight rates in 2009,” the Shipping Outlook report said.
“Ultimately the state of the 2009 dry bulk market will be driven by the performance of the real estate market in China in 2009, and the impact of any potential Chinese policy response to help boost domestic demand.”
Bulk carriers are being used as floating storage due to contango markets — capacity utilization rates are thus distorted.
“A container traffic slow down is not something that I have noticed in the figures for other ports so it will be interesting to see whether this is a localized affect or global”
To the Anonymous poster of the above – Welcome back from your long holiday pal, time to catch up. Container ports in Tianjin, Jakarta and Kaohsiung in Taiwan used to be so full the containers have to be stacked 6 or even 8-high. Now, you can find empty space on the wharf. We sell ERP systems to the ports and do regular maintenance on their systems, so I don’t need to read your post to know things are not well!
These 2 articles tell you everything you need to know… container slowdown is going global, with the carriers being the most negatively effected.
Now let’s get some context and perspective. A slowdown means that a massive amount of cargo is still moving… trade is not coming to a halt… (if you have a 2% reduction in your paycheck, you still have a lot of money coming in…)
What has changed (and why articles act as if the world is ending) is the industry is used to double digit growth rates every year, and they are adding capacity accordingly… the cariers’ business model just broke as trade has moderated or dropped a bit with 50% more capacity coming online in the next 3 years, and no peak season this year.
In short, they did the same thing the US housing industry did… grossly overbuilt with wildly optimistic forecasts… and the result will be the same.
Calculated Risk blog monitors the container volume into and out of the long beach and LA ports, and found the container volume down year-on-year in 2008, which means lower imports from China, and a slow down in US exports from level in H108. The container slow down in Singapore is significant, because it is a major transshipment port, where goods from across the region bound for europe from asia are consolidated into large ship. It is on the major shipping lane between Europe and Asia. A slow down there could mean a major dropoff in trade volumn between Europe and Asia.
As of today bulk cargo trading is on the rise. Capesize vessels the largest of dry bulk vessels have being picking up.
China does seem to be stocking up for the Chinese New Year break. Of course, how long this trend will last will likely determine if the worst has passed.
Reports from the US, Asia and China are not encouraging. NRF and IHS Global Insight Port Tracker report predicts November’s volume at 1.26 million TEU, down 8.5 percent from November 2007 for ports including Los Angeles/Long Beach, Oakland, Tacoma, Seattle, New York/New Jersey, Hampton Roads, Charleston, and Savannah. Parts of Europe are not looking good either with IMDO reporting port volumes down 8 percent in the first half of the year in the republic of Ireland.
Elsewhere information is not up to date, but looks patchy.
Container and general cargo volumes slump in Marseilles, Container volumes finished 17% down for January-September but Cargo throughput at the port of Marseilles Fos totalled 72.9 million tonnes to the end of September for a 1% rise on the first nine months last year. In the first nine months of 2008, container throughput in Rotterdam was 6% up, from 77.8 to 82.4 million. Port Volumes for Durban in south africa were up 8 percent up to september. Hapag-Lloyd increased its transport volumes by six per cent to 1.47 million standard containers (TEU) (previous year: 1.39 million TEU) for the third quarter. Throughput of Vladivostok Container Terminal up 24% in Jan-Aug 07 .In the first nine months of 2008, container throughput at the major Iranian port of Bandar Abbas increased by 15 per cent, compared to Q1-Q3 2007.Saudi Arabia’s ports handled 114.7 million tonnes of cargo during the first nine months of the year, a 10.2 per cent increase on the same period of last year.
My suspicion is that volumes declined over October and November which is not showing up in some of the reports, but it is interesting to read some of the recent shipping news announcements particularly from Maersk of consolidation particularly in some areas. Notably the routes between the US, Asia and Europe, but there are notable exceptions. These appearing to be routes between India, Russia, Brazil, the Gulf, Africa and Europe although that is not to say they are deteriorating now.
today this little slow down just look like nothing compare to the 2009 break! no more conteneur Traffic at all!
just like if people just realyse that the used to by unneccesary thing!