Analysis by Drewry
Development of East-West and North-South two-way container traffic
(Image Credit: Drewry Container Forecast)
According to Drewry, with the days of double-digit world container growth over, the North-South trades were expected to be a shining beacon of hope in the new low-growth environment. But are they delivering on that promise?
After 2012 when volumes flat-lined in the big East-West trades and North-South routes increased by about 5% the latter were heralded as the future of the container industry. The North-South trades were viewed by many as the best bet for carriers looking for the biggest return on investment. Carriers such as Maersk and Hamburg Süd took up that gamble with orders for big wide-beam ships designed specifically to cater for the anticipated fast-growth regions such as Latin America.
Yet, as the above chart shows, growth in the East-West trades returned in 2013, and slightly faster than for the North-South, meaning that when measuring the period between 2008 and 2013 CAGR for both trades was almost identical at around 3%.
While both East-West and North-South routes enjoyed comparable growth last year the demand data for the first eight months of 2014 suggests that the former is accelerating, while the latter is now in reverse gear. The premise that North-South routes would outpace East-West lanes is becoming increasingly redundant.
Cargo trends have been completely turned on their head in 2014 with the East-West trades once again the main drivers of growth. This sudden change suggests carriers require a diverse network to avoid being too exposed to underperforming routes. The slump in backhaul East-West cargo will add to carrier costs by widening trade imbalances.
Source: Drewry
