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Container Shipping & Trade

Container Shipping & Trade

US versus Europe – a ‘tale of two Christmases’

Fri 06 Oct 2017 by Rebecca Moore

US versus Europe – a ‘tale of two Christmases’
Xeneta CEO Patrik Berglund sees mixed fortunes for the container segment’s peak season, as surging US demand is offset by European woes

Peak season could be a “tale of two Christmases” benchmarking platform Xeneta said.

Xeneta chief executive Patrik Berglund highlighted the differences between the US and Europe. “High consumer confidence and strong job growth in the US bodes well for the industry, with shops intent on stocking up for the expected Thanksgiving-Christmas rush.”

The Washington DC-based National Retail Federation has forecast US container imports to grow by as much as 13% in October year-on-year. “Demand is impressively strong, but in Europe it’s a different story,” Mr Berglund said.

“Stubbornly high unemployment, sitting at 9.1% in the Eurozone (compared to just 4.3% in the US), combined with Brexit uncertainty and the sluggish growth of several large economies are factors combining to give the lowest scores in the EU economic confidence index since 2009 (August 2017). And not surprisingly, those who are unemployed, under-employed, or afraid they soon will be one of those two things, aren’t in the mood to spend too much on discretionary retail items. That weak confidence and demand naturally hits the carriers.”

Berglund said the impacts are already being seen. Maersk, he noted, recently decreased capacity on its Asia-Europe routes by 10%, while both the CKYH and G6 Alliances have each cut one of their Asia-European runs, reducing 11 weekly sailings to nine. In addition, industry reports point out that carriers are reducing vessel speeds to save fuel costs, some by 10% – suggesting that “margins are now so fine that every cent saved makes a difference”.

These actions will, Mr Berglund said, help maintain rates and create the appearance of a still healthy market. However, “this is merely a short-term fix in the hope that broader economic factors will eventually correct the supply/demand balance”.

“It’s a worrying time for those servicing European ports, and the shippers who rely on predictability of service,” he stated, “and the rate development paints a clear picture of that.”

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