Asia-Middle East/India Cargo Growth Poor in Q4 2013: Analysts

Cargo growth between Asia and the Middle East/Indian Subcontinent region was poor in 4Q 13, indicating that ocean carriers need to seek economies of scale and to look for more profitable ways of serving the trade lane, finds Drewry's latest Container Insight Weekly in a trade route analysis. The following is a brief extract:

Cargo shipped from Asia to the Indian Subcontinent (ISC) and Middle East region (including the Red Sea) averaged 502,000 teu/month in the final quarter of last year, 8.5% less than the previous quarter due to seasonal factors, but still 3.3% more than a year earlier. The quarterly decline to the ISC was 8.6%, down to a monthly average of 209,000 teu, which was 7.4% higher than a year earlier - whilst the fall to the Middle East was a slightly greater 8.4%, down to 293,000 teu, only 0.6% more than during the same period of 2012.

Although cargo growth has clearly returned to the route, ocean carriers will be disappointed with the subdued nature of it, given both regions’ mercurial performance between 2005 and 2010. More was expected of India, in particular, but the country continues to be hampered by inflation, trade restrictions and bureaucracy. The Middle East, though still enjoying high oil prices/revenue, remains rocked by the social and political messages coming out of the ‘Arab Spring’.

Ocean carriers’ response to the cargo downturn in 4Q 13 was to continue using sailing cancellations to regulate vessel capacity to short-term cargo demand, rather than withdraw whole services over the low season, which trend was maintained right through to February 14. The practice is so common in other tradelanes now that it appears to have become standard procedure in times of poor cargo growth.

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