Container freight spot rates decline, but liftings are 'still good' – for now
Container spot rates from Asia to Europe and the US held up reasonably well this ...
OOCL has released it 2019 fourth-quarter operational results, showing volume gains on all its trades except the transpacific, which took a hit from the tariff-related downturn.
Moreover, OOCL’s traditional pre-cursor to the quarterly financial results season would appear to bode well for the earnings of its peers, to be published in the coming weeks.
Across its four regions, the Cosco subsidiary’s liftings were up by an above-par 4.8% on the same quarter of the previous year, to 1,798,610 teu.
The carrier’s largest sector, intra-Asia/Australasia, saw a 5.9% increase in volumes to 815,818 teu, while the Asia-Europe tradelane improved by 8.7%, to 365,072 teu.
The biggest percentage increase was recorded on the transatlantic, where OOCL carried 12.7% more containers than in the previous year, 121,933 teu.
However, due to the impact of the US-China trade war, liftings on OOCL’s second-biggest trading region – the transpacific – declined 1.1% to 495,787 teu.
Total turnover increased 2.3% to $1.6bn, however average revenue per teu fell 2.4% on the same quarter of the previous year, suggesting the carrier had opted for a strategy of volume growth over rates.
Again the only negative revenue growth came from the transpacific, which declined by 5.2% to $635m.
Intra-Asia/Australasia saw a 10.8% increase in revenue to $512m, transatlantic revenue came in at $150m, up 9.9%, and the Asia-Europe tradelane recorded a 2.6% increase in the quarter to $305m.
OOCL’s total capacity increased by 2.6% quarter on quarter and the carrier’s vessel utilisation was 1.8% higher.
Meanwhile, data on December container imports at the top 10 US ports, compiled by New York-based consultant Blue Alpha Capital, show a 12.7% drop in throughput, compared with the same month of the previous year.
This follows a 7.9% decline in November and an 8% fall in October, confirming the ramifications of US tariffs on Chinese imports.
US west coast ports suffered far worse than their east coast counterparts as the structural changes on where imports enter the US continued the trend towards the east.
With their December container imports logged at 373,511 teu and 323,231 teu, respectively, the two biggest US ports of Los Angeles and Long Beach plunged by 20.3% and 13.4% on December 2018, according to the Blue Alpha Capital data.
Overall, the west coast ports received 17.2% fewer containers across their quays last month than a year ago, at 883,864 teu. And east coast ports did not escape the effect of the tariffs and slumped by a year-on-year 6.7% to a combined 741,390 teu of imports.
“These actual volume decreases are significant and you have to go back to the financial crisis to find comparable declines,” said the author of the report and Blue Alpha Capital founder John D McCown.
Given that some 43% of all US container imports currently originate from China, Mr McCown said that despite the Phase One agreement reached this month cutting the duty on $120bn of Chinese imports from 15% to 7.5%, there were still $250bn of imports subject to a 25% tariff.
He said the volume changes in the fourth quarter suggested further negative numbers, “at least for the first nine months of 2020, that will circle around the 10% actual decline we saw in the fourth quarter”.