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glory 12-09-2017 12:54 Area News 49

The container market from Asia to East Coast South America (ECSA) is on course for double-digit growth this year, but will still fall shy of 2015 numbers, shipping consultancy Drewry said.

Southbound container shipments from Asia to ECSA continue to recover after what were a few “truly dreadful years”. In the first seven months of 2017 southbound traffic flows increased by 11% to nearly 710,000 TEU, Drewry cited data from Datamar.

Based on current numbers the southbound trade will end the year with a tally of about 1.3 million TEU, a rise of 11% on 2016 but still some 5% short of 2015 levels and 15% down on the 2013 peak.

Three carriers, including Evergreen, CMA CGM and Cosco, introduced a few extra sailers in July and August in a bid to capitalise on higher freight rates in this corridor. The number of available slots from the three weekly services is currently tracking at about 10% above the amount on offer one year ago, with the upwards trend primarily the result of the ongoing upgrade in vessel capacity. The average size of the 39 ships working between Asia-ECSA was 8,955 TEU in August, up by 2% on the same month last year when there were two fewer units in operation.

With ships full on the southbound leg carriers have enjoyed a freight rate bonanza in recent months with spot prices rising in each month since February. Shanghai to Santos rates hit a 44-month high of USD 4,050/40ft container in July.

However, it seems that utilisation took a bit of a nosedive in August as rates dropped by USD 640 in August. While this will be a matter of slight concern to carriers even after the fall, that price was still about 13% above the value of the same month one year ago.

“Freight rates on this trade are susceptible to relatively small changes in the supply-demand balance so carriers will need to be watchful if they want to avoid any further pricing erosion,” Drewry concluded.

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