“The latest container statistics for the Europe-East Coast South America trade shows that the southbound market continues to strengthen, while the long-time downwards trend for the northbound trade has bottomed out and starting to turn the corner,” reads the latest entry on the Drewry Container Insight Weekly report.
The report cites figures from Datamar, which up to and including September reveal that southbound container volumes from Europe have performed very well, registering year-on-year gains in 13 consecutive months, with seven of those months rising by at least 10%, including the last two months. After nine months in 2017, the southbound trade was up by 12% compared to the same period last year and is on course to match the 2014 annual total after a couple of lean years, marking this as the first year since 2013 with any type of annual growth.
Numbers are encouraging: In 2017, North Europe exports to ECSA increased by 10% to 442,000 teu after nine months. Shipments in the more reefer-oriented northbound trade have fared less well and outbound ECSA traffic was down by 3% after three quarters. However, trade has improved markedly since the second quarter, which was impacted by severe weather that shuttered the port of Itajai in south Brazil for around three weeks across May and June. According to th report, northbound volumes increased by 1.8% year-on-year in the third quarter, following three consecutive negative quarters.
The report shows that imports into Brazil have benefited from a fall in the country’s inflation rate, which recently decreased to a near 10-year low of about 4%, and from an appreciation of the real currency. A bumper soy bean crop this year, following a disastrous one the year before, is helping the country to climb out of recession, which in turn is giving some assurance to importers and consumers that the tide has turned.
Drewry expects things to improve further “as Brazil is intent on boosting its fruit exports, up by about 4% so far this year.” The country is the world’s third largest fruit producer, surpassed only by China and India, although Brazilian production currently amounts to a mere 1% of global fruit transactions.
Loops and potential
French carrier CMA CGM, prompted by the market’s potential and the attraction of high paying reefer rates, launched its seasonal North Brazil Express (NBX) loop, with average vessel sizes of 1,750 teu (including 500 teu reefer slots). The carrier will add calls to London Gateway in late-November so that the service has a second North Europe call in addition to Rotterdam. To cater for the new port a fifth vessel will be assigned to the service.
In addition, Maersk Line will add its own seasonal reefer loop between November and February 2018 with the start of the Pecem Express serving Pecem, Algeciras, London Gateway, Rotterdam and Pecem again.
Loop services as these are a clear sign of hope for spot rate increases during peak fruit export season. It will be up to shippers to cease the opportunities and look for further business to keep demand in flow.
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