DCN April 2019 Edition

Reality
bites
Who’d be in liner shipping?
Container trade analysts say history suggests that if
carriers have two good years in 10, they’re doing well – and
even that may be optimistic. The trade between north and
east Asia and Australia is the nation’s biggest and most
important, which is why over time it has attracted players like the
proverbial moths to the flame. But when the flame flickers …
AS ALWAYS, STATISTICS TELL A LOT OF THE STORY
In calendar year 2018 the southbound trade produced one of
its strongest growth years, at 7%, helping to explain why some
carriers thought an extra service and bigger ships could be justified.
Volumes from China grew 8%, while Japan receded 4%, Korea grew
1%, Taiwan slipped 1% and Hong Kong dropped 6%, although it’s
hard to know how much of the latter was simply business shipping
directly from South China instead of, as previously, moving via HK
transhipment. All in all the southbound N&EA trade hit 1.684m
TEU, of which China accounted for 1.45m. “This does not mean
North Asia services will end,” a carrier executive was quick to
assure, despite the huge importance of China continuing to grow
year on year. Japan still provided 62,000 TEU of southbound cargo,
Korea 75,000 and Taiwan 63,000 – although liftings from Japan
and Korea were hit by the demise of car manufacturing
in Australia.
Despite instinct suggesting otherwise, northbound trade from
Australia to N&EA actually grew in 2018, by 1.8% - but this growth
was almost entirely thanks to reefer cargoes which shot up by
9.7% on the back of strong demand for citrus, grapes and meat.
Dry cargo liftings were hit, with, most notably, grain, cotton and
wastes all in sharp reverse. Total northbound trade grew around
12,000 TEU in 2018 but still only reached 807,000 TEU – and that
growth went to China where liftings reached 484,000 TEU while
Japan (125,000), Korea (101,000), Taiwan (62,000) and Hong
Kong (32,000) were stable or slipping. That reefer growth also went
mostly to China, with Japan and Korea stable.
Xxxxxxxxx Songquan Image Deng supplied
CHINA AND FINE WINE
One of the bright spots for carriers in recent years has been the
increasing Chinese demand for Australian wine but that looks to
have plateaued in 2018, with the N&EA total reaching 19,000 TEU
in 2018, just 500 TEU up on 2017. However, this compares with just
8500 TEU in 2015. The big year was 2016, when shipments doubled;
since then growth has been more incremental. Of course the
fundamental takeout from these overall figures is that the N&EA
trade remains harshly imbalanced, in the ratio of 2:1 southbound
over northbound, which means there’s a core structural problem
that lines are powerless to overcome. With those northbound
staples falling away carriers have had to revert to their earlier
practice of evacuating empties at every opportunity, either by filling
otherwise unused (paying) northbound slots or by chartering ships
to sweep up the empties (see accompanying article). “Our mantra
is ‘get the boxes out’,” says one trade manager. “That is, if you can
get them into and through the terminals in the first place.”
CHINESE NEW YEAR
He notes the fall-off in southbound business at Chinese New Year –
generally expected but much more severe in 2019 than 2018 – saw
12 round voyages cancelled “which means 12 lost opportunities to
reposition empties”. And it is this fall-off in southbound business,
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