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Port Report: A solid first quarter… but forwarders fear Australia’s freight future

Australian ports recorded in excess of 1.94 million twenty foot equivalent (TEU) container movements during the first quarter of 2019, according to a compilation of the latest data by FreightWaves. That’s a fairly solid result for Australia. But first quarter 2019 volumes are likely down compared to the first quarter of 2018. And forwarders fear that there’s a downturn on the way.

Australia’s 1.9 million TEU figure is a marginal under-count because there are fairly small volumes of containers that go through dry bulk export ports. These include Gladstone and Newcastle.

To put Australia’s throughput into context, the busiest box port in the U.S. is the Port of Los Angeles. It had a throughput of 9.5 million TEU in 2018.

Of the total 1.94 million TEU, about 1.42 million TEU were full, which is 73 percent of the total, and 522,446 (27 percent) were empty. About 49 percent of the country’s total box throughput in the first quarter were import boxes and 51 percent were export boxes. However, about 96 percent of the import boxes were full whereas only 51 percent of the export boxes were full.

Port of Melbourne, Victoria

Australia’s port of Melbourne on the south coast, opposite the island of Tasmania, was the busiest port in the country in the first quarter. Melbourne handled 644,715 TEU of overseas import and export boxes, which is an increase of 1.09 percent over the first quarter of 2018. That figure excludes coastal container volumes and boxes shipped to/from Tasmania.

In all of the first quarter of 2019, Melbourne handled 299,254 full import boxes and 165,444 full export boxes. On average, Melbourne handled 99,751 full import boxes and 55,148 full export boxes each month.

Port Botany, New South Wales

Port Botany in the state of New South Wales was second with 629,873 TEU in the first quarter of 2019. That’s down 1.26 percent from the first quarter of 2018. Melbourne handled 307,520 TEU of full import boxes and 118,772 TEU of full export boxes. This is interesting because it suggests that more full boxes entered Australia via Sydney than Melbourne even though the latter handles more boxes overall. However, a great many more full boxes exited Melbourne than Sydney.

On average, Sydney handled 102,484 full import boxes each month and 39,591 full export boxes. NSW Ports, the operator of Port Botany, noted that freight volumes of non-metallic minerals, miscellaneous manufactured articles, textiles, fabrics, wood and wooden articles generally trended down.

Brisbane, Adelaide and Fremantle

The ports of Brisbane, Adelaide and Fremantle together handled about as many TEU as either of Melbourne or Sydney. Brisbane, Adelaide and Fremantle together handled 665,461 TEU in the first quarter of 2019. Together, Brisbane, Adelaide and Fremantle handled 305,837 TEU of full imports and 215,875 of full exports. On average the three handled 103,602 full import TEU a month and 71,958 full export boxes a month.

Down, down, down

Superficially eyeballing the month-by-month data reveals that volumes were generally down in February compared to March. This fall is likely explained by the advent of public holidays across Asia. However, volumes took a more sinister turn on a like-for-like comparison.

The top three ports by TEU volume in Australia are Melbourne, Sydney and Brisbane. Together they account for about 80 percent of all the box throughput in the country. Comparing volumes in the first quarter of 2019 to the first quarter of 2018 reveals volumes were generally down. Although Melbourne was up by 1.06 percent, Sydney was down by 1.26 percent. So Sydney’s decline in volumes offsets Melbourne’s growth and, overall, there is a marginal decline in the aggregate of the throughput volume of the two ports.

Brisbane was down significantly (by 6.59 percent), which is just over 21,000 TEU difference. And, in the minutes of the Western Australia Port Operations Taskforce meeting, total trade at the Port of Fremantle fell in the four months of December to March. Loaded imports particularly fell although export volumes were up in that same timeframe.

Zero inflation, federal election, falling freight rates

Local freight forwarders who handle both the import and export trade foresee a downturn.

Paul Golland is a director of Brownways, a Sydney-based forwarder. He’s also on the board of  the Australian Federation of International Forwarders. He discussed with FreightWaves what’s happening in Australia.

“Yes, there was a bit of an upturn in March. But it’s not as good now as it was. Inflation’s down to zero as people are nervous about spending, so there’s less coming in,” he explained.

There’s also a political dimension too. Australia is almost literally in the middle of a federal election period.

“Maybe everyone’s waiting for the election to be over and they’re looking to see which way the country goes. Once the election’s over we may see an upturn,” Golland said. “And it’s the end of the financial year, which always causes a slowdown. So there are a few things happening at the same time.”

Forwarders want to be busier

But the downturn may be a bit wider than just the first quarter though. Golland explains that the trend seems to be for lower and lower freight rates on a weekly basis.

“Almost every week freight rates are down. Obviously they [shipping lines] have got capacity they’re trying to fill. So there’s certainly a downturn,” he said.

“It’s not a good thing for industry. We’d all like to be busier. But you can only handle what’s coming in,” he concluded.

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Jim Wilson, Australia Correspondent

Sydney-based journalist and photojournalist, Jim Wilson, is the Australia Correspondent for FreightWaves. Since beginning his journalism career in 2000, Jim has primarily worked as a business reporter, editor, and manager for maritime publications in Europe, the Middle East, Asia, and Australia. He has won several awards for logistics-related journalism and has had photography published in the global maritime press. Jim has also run publications focused on human resources management, workplace health and safety, venture capital, and law. He holds a degree in law and legal practice.

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