Slow growth expected for European ocean cargo, says Global Port Tracker report

A weak fourth quarter growth forecast is on the horizon for ocean container volumes in Northern Europe, according to the most recent edition of the Global Port Tracker report from maritime consultancy Hackett Associates and Institute of Shipping Economics and Logistics.

Ports surveyed in North Europe Global Port Tracker report include the six major container reports in North Europe: le Havre, Antwerp, Zeebrugge, Rotterdam, Bremen/Bremerhaven, and Hamburg.

Year-to-date, the report said that the total volume handled by these ports, including deep-sea, empties, transshipment, and intra-European short sea traffic, is up 2.9 percent annually, with imports up 4.1 percent and exports up 3.1 percent.

For all of Europe, the report expects a 5.4 percent increase in total 2014 shipments to Europe at 22.8 million TEU (Twenty-Foot Equivalent Units), with North Europe pegged to grow 7.1 percent to 14.7 million TEU, and the Mediterranean-Black Sea region expected to increase by 2.6 percent to 8.1 million TEU. 

On the export side, it is expecting a 3.5 percent increase in 2014 for all of Europe at 18.2 million TEU, while North Europe is expected to head up 6.1 percent to 11.7 million TEU, while the Mediterranean-Black Sea region is expected to see a 1 percent decline to 6.5 million TEU.

Even though most of these numbers point to growth through 2014, with the first half of the year benefitting from strong industrial sector expansion and demand from Asia and North America, the report said there are multiple signs of trouble ahead in the form of declining growth rates, including possible deflation in the European Union, and the conflict in the Ukraine, which the report said is having a “direct effect” on trade, coupled with the German, French, and Italian economies not performing at a high level.

“What is really happening here is that European governments, especially Germany, are refusing to get off the austerity bandwagon,” Hackett Associates Founder Ben Hackett told LM. “This is having a negative effect on consumer confidence, with weak consumption and lower imports, too, which leads to lower growth. And China and India are not growing as quickly as we would like to see as growth there is largely export-oriented. GDP levels in Germany, France, and Italy are either negative or down significantly so there is not a lot there in terms of growth prospects.”

Another issue directly related to trade cited by Hackett in his commentary in the report explained that as the number of containers for transport declines, shipping lines are still “ignoring the repeated lessons of the past…[and] in the face of declining demand, supply should be cut.”

This, in turn, leads to a situation where there is little capacity in layup, with new and bigger ships entering the market, he wrote, and results in what he called a market share battle, with freight rates declining.

“This type of situation causes problems and leads to a price war,” Hackett said. “It also may have to do with the various management changes at ocean carrier lines. No matter what is happening in the market, if one line starts a price war then all the other lines join in. There are a couple of carriers that can afford to do it like MSC, CMA, and Maersk that operate large ships in the 15,000-to-18,000 TEU range and have lower unit costs so they can afford lower prices.”