Maersk Line reports strong growth in shipping volumes from Asia to the rest of the world in the first weeks of the year. The shipping line estimates shipping volumes out of Asia increased 10% to 15% over last year in the run-up to this month’s Lunar New Year break, as retailers rushed to move goods out of China before the nation’s factories shut for a couple of weeks.
Despite the strong start, falling freight prices and excess capacity continue to haunt the global shipping industry, with spot shipping rates in major trade lanes near record lows. Shipping consulting firm Drewry Maritime Research estimates the container shipping sector faces a loss of more than $5 billion in 2016.
Overall shipping capacity for the industry rose 8% last year, with nearly all the newly-delivered ships idled, said Robbert Van Trooijen, chief executive of Maersk Line Asia Pacific. He said it would take several years for the industry to reach a better balance between supply and demand.
The low freight rates helped drag Maersk Line into a fourth-quarter net loss of $182 million, compared with a net profit of $655 million a year earlier. Spot freight rates in December for shipping on the key trade lane from Shanghai to Europe’s Port of Rotterdam were down 79% from early 2015 to around $222 per twenty-foot equivalent unit, a standard measurement for shipping containers. That level isn’t considered profitable for most lines.
A need to restock retail warehouses and store shelves in Europe this spring after cautious retailers kept inventories very low in 2015 may help fuel demand on the Asia-Europe trade lane. Meanwhile, the trans-Pacific trade for shipments from Asia to North America will likely continue to deliver moderate growth on the back of a rebounding U.S. economy.
