Drewry: Transatlantic trade sees boost in box volumes

Container shipments from North Europe to North America have picked up in 2017 thanks to Mexico’s growing demand for auto parts, according to a recent analysis from shipping research and consulting firm Drewry.    Container shipments from North Europe to North America – comprising the United States, Canada and Mexico – rose 4.7 percent year-over-year for the first eight months of 2017, according to statistics from PIERS and CTS, Drewry reported in its latest Container Insight Weekly.
   The London-based shipping research and consulting firm said the growth can largely be attributed to Mexico’s growing demand for auto parts.
   Mexico has become the seventh largest car manufacturer in the world, and 80 percent of its car production is ultimately destined for the U.S. market. New investments from Kia, Toyota, BMW and Daimler Benz are expected to boost Mexico’s car manufacturing capacity to 5 million vehicles by 2022, up from 3.4 million in 2015, Drewry said.
   Meanwhile, on the North America to North Europe trade, volumes rose 2.9 percent year-over-year for the first seven months of 2017, thanks to solid performance between April and June.
   Compared to the first seven months of 2016, volumes on the eastbound leg from:
     • The U.S. East Coast increased 2.2 percent;
     • The U.S. Gulf Coast increased 0.8 percent;
     • The U.S. West Coast increased 1.6 percent;
     • Canada increased 1.6 percent;
     • And Mexico increased 9.7 percent.
   Mexico now accounts for 15 percent of the total eastbound trade.
   Meanwhile, spot rates on this contract-dominated market have tended to not deviate much in either direction.
   On the North Europe to North America leg, spot rates have hovered around $1,750 per FEU in the first half of 2017 before losing about $50 in July, but rates have since risen to a year’s peak of $1,800 in September, according to Drewry’s Container Freight Rate Insight.
   On the North America to North Europe leg, spot rates fell from about $530 per FEU last September to around $500 per FEU this September.
   Capacity is gradually being added to the transatlantic trade as carriers continue to add larger vessels to existing services.
   From North Europe to the U.S., Canada and Mexico, average vessel size on the trade stood at 5,071 TEUs in September, up from 4,423 TEUs in September 2016, while on the eastbound leg, average vessel size totaled 4,830 TEUs in September, up from 4,583 TEUs last September, according to ocean carrier schedule and capacity database BlueWater Reporting’s Capacity Report.
   Looking ahead, Drewry does not expect any sudden spike in eastbound traffic, despite the value of the U.S. dollar to the euro dropping by almost 14 percent since the start of the year. The eastbound transatlantic trade appears to be a very stubborn market, with container volumes typically remaining at very stable levels, Drewry explained. “Even if a weaker dollar does spark a surge in American exports, the carriers’ surplus equipment stocks in areas such as New York will legislate against any attempts to raise what are still pitifully low backhaul freight rates,” the firm said.
   Drewry also expects westbound demand to taper off in the remainder of the year, with freight rates remaining firm.