Sluggish demand outlook for Asia/West Africa trade route

The demand outlook for the Asia to West Africa trade route has quickly deteriorated and is unlikely to reverse course in the short-term.

Drewry Maritime Research pointed out in this week’s Container Insight Report, Asia to West Africa container traffic had started the year sluggishly, keeping spot rates pointing downwards.

Having recorded relatively strong – if slowing – growth of 7% for the full year in 2014, southbound container traffic from Asia to West Africa has shrunk by 4% after the first four months of the year to approximately 410 000 TEUs, said Drewry.

It says the Asia to West Africa trade has tended to return constant monthly traffic flows, so the latest decreases do represent a worrying trend for carriers. Despite the tendency of carriers to upgrade the size of the ships deployed in the trade, the number of available slots has come down in recent months due to a number of skipped voyages that have had a big impact in a small trade.

This response by carriers to a weakening demand environment has seen the monthly southbound capacity total slashed by about 20% when comparing May to January, reported Drewry.

The maritime analyst said that the capacity reduction had helped to boost average ship utilisation but not yet to a level that supported higher spot rates. Carriers were forced to postpone a $600-per-container general rate increase (gri), planned for 1 June to 1 July, but as very little will have changed in the interim it seems unlikely they will be entirely successful with their next attempt.