Supply/Demand: Med-North America
Tuesday, September 10, 2013
Photo: Drewry

Mediterranean hope
Trade from the Mediterranean to North America is picking up, but off a very low base, so the second quarter’s 8% growth over the first three months of the year could yet turn out to be another false dawn.

Cargo growth from the Mediterranean to North America remained promising in 2Q 13, albeit off a low merchandise base. Container traffic increased by 8% compared to 1Q 13, up to 320,000 teu, much of which will have been seasonal, but year-on-year growth in the first half of the year was still 7%.

In the sister tradelane from North Europe to North America, growth between the first two quarters also reached a healthy 9%, but there was a y-on-y decline of 1% in the first half of the year. The point suggests that cargo mix was a big differentiator in the Mediterranean, with building materials to the US probably being a key player. According to Global Trade Information Services (, the sector (including granite) increased by 9% between the first two quarters, up to 600,163 tons.

Otherwise the signs of economic recovery in the US remain mixed. Although the annual GDP growth rate in the second quarter was recently revised up from a poor 1.7% to 2.5%, and the housing market is improving, unemployment remains at 14% and retail sales are still low.
Westbound Mediterranean-North America Container Traffic (’000 teu)

Ocean carriers’ response was to withdraw some of the capacity that was optimistically added in April and May. The effective capacity of all vessels sailing from the Mediterranean to North America was cut by 0.6% in June, and then, after a month’s standstill, by a further 3.1% in August, down to 144,000 teu. This was achieved only by reducing the average size of vessel deployed in some schedules, as the number of weekly loops remained more-or-less the same, and just a few port rotations were changed. Another three sailings were also cancelled in August, compared to only one in July and three in June.

The exception was Hapag-Lloyd/Hamburg Sud’s jointly run MPS service between the Mediterranean and West Coast North America, whose vessels are being upgraded from 2,800 teu to 4,250 teu. Between June and August, the average size of its nine vessels already increased from 2,800 teu to 3,473 teu due to the deployment of 4 x 4,250 teu ships.

The overall impact of supply and demand at the end of 2Q 13 is that average westbound vessel utilization remained a poor 73% in June, which was the same as in May. Final figures for July are still awaited, but a small improvement is likely. As with previous analysis of this tradelane, these utilization figures need to be treated with caution, however, as its vessels are also used for the transhipment of cargo to/from the Mid-East/Indian Subcontinent and Africa, the quantity of which is difficult to estimate.


Cargo from North America to the Mediterranean remained poor in 2Q 13, falling by 4% compared to the first three months of the year, down to 248,000 teu. Despite this, there was still year-on-year growth of 8% in 1H 13, which is surprising as most Mediterranean countries, such as France, Italy, Spain, Greece and Cyprus, remain in or close to recession.

The comparative changes in the sister tradelane from North America to North Europe were a 3% decline and 0% respectively. Cargo levels are low, however, so small differences in cargo volumes can make big percentage changes.

The consequence of the westbound service changes mentioned earlier is that the capacity of all eastbound vessels fell by 1% in June, down to 149,000 teu, which, after a standstill in July, fell by a further 3% in August, down to 144,000 teu.

his meant that the average utilization of eastbound vessels fell from a poor 58% in May to an even poorer 52% in June, taking freight rates with it.

Drewry believes further rationalization of services seems inevitable, but it is difficult to see much changing prior to the P3 clarifying its intentions after 2Q 14.

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