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As the ASEAN “tiger economies” continue to reshape the world’s largest container trade, some domestic shippers are questioning the industry’s march towards ultra-large container vessels (ULCVs).
With 31m teu and 100 port pairs, intra-Asia accounts for roughly one-in-four boxes shipped worldwide every year.
And, according Drewry director Han Ning, the rise of the “ASEAN tiger” economies is deepening the region’s trade ties, particularly between South-east Asia and the Far East’s “older tigers” of China and Korea.
“Logistics providers in Asia will experience a very lucky period compared with the long-haul trades,” she said at the TOC Asia Container Supply Chain conference in Singapore.
“Long-haul routes from ASEAN stayed stable, other routes are losing market share and the only trade with remarkable growth is Far East–ASEAN,” she noted.
Ms Ning said ASEAN trade with Japan was flat, and that rising imports from China and Korea were the key drivers of growth. On China-ASEAN routes, for example, key commodities were machinery and electronics, textiles, metals, chemicals, and plastics and rubber.
To demonstrate further, she said, the global average volume of import and export goods is 4-5%, compared with a projected 9-10% in ASEAN over the next five years. The trade bloc averaged 5.6% GDP growth over the past three years, with Cambodia, Laos, Myanmar, Thailand and Vietnam all “star performers.”
Digging deeper, Ms Ning said the share of ASEAN merchandise trade was down in Singapore and Malaysia, but up in Thailand and Vietnam, the latter the “obvious superstar”, considering growth from only a 4% market share in 2004 to 10% in 2017. The share of exports in the Vietnamese economy – only 7% in 2011 – is now 13% and expected to reach 15% by 2023.
The major ASEAN ports to benefit from the region’s growth, she noted, were Vietnam’s Cat Lai, in Ho Chi Minh City, and Indonesia’s Tanjung Priok, in Jakarta, which now enjoy respective market shares of 11% and 8% of ASEAN port throughput.
ASEAN shippers, however, appear to be baulking at the prospect of more ULCVs operating in the region. For example, David Wignall, chairman of Seaport Group, said shippers in Indonesia had little appetite for the investment required to build more ULCV-capable ports.
“Shippers in Indonesia don’t believe they need bigger ships, they argue that 6,000 teu ships for intra-Asia services are large enough,” he explained.
At a recent stakeholder meeting in Jakarta, Mr Wignall argued the case for more 18,000 teu-capable ports, noting that otherwise Indonesia “could get cut out of direct access to certain types of shipping”.
But their counter argument, he said, was that only 5-8% of containers need direct calls.
“This is the fourth-biggest country in the world by population and one of the most important maritime markets saying they don’t need these large ships, and I think that’s reflective of the views of quite a lot of shippers.”
He said the number of port pairs had fallen significantly over the past three-to-four years, meaning the ability to get cargo from A to B quickly had also fallen and, in many cases, increased inventory costs.
“Almost certainly these big ships may be doing well for shipping lines, but doing quite badly for the shippers and the supply chains they support,” Mr Wignall argued.
“Therefore, are we going to see a reduction in ship sizes, falling back down to maybe 12,000 or 8,000 teu, which are far more flexible and far easier to deal with at ports?” he asked.