Blog Post
Strong demand drives up Transatlantic utilisation
- By MDS Transmodal
- •
- 19 Nov, 2018
MDS Transmodal says volume growth outstripped supply in the third quarter of the year to boost transatlantic load factors. The analysts expect the trend to prolong through the final quarter of 2018, with eastbound and westbound services expected to report higher utilisation levels
Transatlantic box numbers rose by 10% in the third quarter of 2018 compared with last year, according to MDS Transmodal
TRANSATLANTIC containerised trade enjoyed a buoyant third quarter of the year on the back of double-digit percentage demand gains compared with the same period last year, helping outstrip supply additions.
Analysing load factors in either direction, MDS Transmodal found that demand growth between Europe and North America grew by 10% during the third quarter of 2018 compared with the same three-month period of last year. Supply growth increased by a rate of circa 4%.
During the three months, the utilisation level is estimated to have grown by three percentage points and it is projected to exceed a level of 83% during the final quarter of this year.
For the fourth quarter, MDST forecasts demand to grow by approximately 6%, while boxship slot space will fall by around 4%.
Analysing the load factor for the two directions separately, however, we expect volume in the eastbound direction (North America to Europe), to increase at a higher rate than westbound trade (Europe to North America), during the fourth quarter of 2018.
Analysing load factors in either direction, MDS Transmodal found that demand growth between Europe and North America grew by 10% during the third quarter of 2018 compared with the same three-month period of last year. Supply growth increased by a rate of circa 4%.
During the three months, the utilisation level is estimated to have grown by three percentage points and it is projected to exceed a level of 83% during the final quarter of this year.
For the fourth quarter, MDST forecasts demand to grow by approximately 6%, while boxship slot space will fall by around 4%.
Analysing the load factor for the two directions separately, however, we expect volume in the eastbound direction (North America to Europe), to increase at a higher rate than westbound trade (Europe to North America), during the fourth quarter of 2018.
Transpacific capacity changes (Fourth quarter of 2018)
Supply additions
- 2M Alliance (MED-GULF/TA6) – deployed capacity increased by 7%, average ship size increased from 6,787 teu to 7,267 teu
- 2M Alliance (MED-USEC/TA5) – deployed capacity increased by 9%, average ships size increased from 7,197 teu to 7,810 teu
- Ocean Alliance (AMERIGO/ATM1/MENA) – deployed capacity increased by 7%, average ship size increased from 4,590 teu to 4,932 teu
- 2M Alliance (NEUATL4/TA4) – New service began in September, deploying five ships of around 4,700 teu operating between northwest Europe and North America’s east coast
Capacity cuts
- 2M Alliance (NEUATL2/TA2) – deployed capacity down 32%, with average ship size decreasing from 7,157 teu to 4,865 teu
- 2M Alliance (NEUATL3/TA3) – deployed capacity down 21%, with average ship size decreasing from 7,159 teu to 5,656 teu
- Hapag-Lloyd/OOCL/MSC (SLCS 1) – deployed capacity down 12%, with average ship size decreasing from 4,070 teu to 3,589 teu
- Maersk Line (COLOMBIA EXPRESS) – service no longer active; this service used to operate between northwest Europe, Colombia and North America’s east coast, deploying six 2,500 teu vessels
- MSC (SAWC/USA/NWC) – operated between Northwest Europe, Latin America and North America’s west coast. The service still continues but Philadelphia has been removed from the rotation, so it no longer operates on the transatlantic
Eastbound
Utilisation levels in the final quarter of the year will tighten on the eastbound transatlantic trade, as demand grows by approximately 8% and supply falling by about 10%.
Based on the latest trade data available at the time of this analysis, we estimate that the principle country pairs on the eastbound transatlantic trade during the third quarter of the year were the US to Turkey, the US to the UK and the US to the Netherlands.
These pairs are estimated to account for more than 30% of overall traffic moved on this route. A similar share is expected for the fourth quarter of 2018.
However, the growth rates of trade moved between these countries vary.
Trade from the US to Turkey and the US to the UK are estimated to have decreased by 4% and 1%, respectively, while containerised trade moved on the US-Netherlands trades is projected to have increased by 12%.
For the fourth quarter of 2018, MDST forecasts growth in the region of 5% on the US-Turkey and US-UK trades, whereas for the US-Netherlands route similar strong growth (12%) is expected.
Looking at the commodities, on a Standard International Trade Classification five-digit level, the strongest driver behind third-quarter growth on the US-Turkey trade was ‘ferrous waste and scrap’, up by more than 3%.
‘Non-specified appliances, which are worn or carried or implanted in the body to compensate for a defect or a disability’, rising 3%, was a key contributor to the 5% growth level on the US-Turkey trade.
On the eastbound US-UK trade a notable development on was a 20% drop in commodities classed as ‘other books, brochures and similar printed matter, not in single sheets’.
Westbound
On the westbound transatlantic trade, or Europe to North America, MDST anticipates demand to grow at a higher rate than supply, resulting in improved load factors.
Demand is expected to grow by more than 5% in the fourth quarter compared with last year, while supply is expected to increase by about 1% during the corresponding period.
Based on MDST’s trade data, it is estimated that volumes moved from Germany to the US increased by 16% in the third quarter of 2018 compared with last year.
During the same period, the other two major country pairs on this trade lane, Italy-US and France-US, are estimated to have seen an annual increase of 11% and decrease of 1%.
For the fourth quarter of 2018, MDST forecasts the Germany-US, Italy-US and France-US trades to grow by 2%, 7% and 4%, compared with last year.
On a SITC five-digit level, the main commodity driver on the German-US trade will be ‘photographic plates and film, exposed and developed, other than cinematographic film’, rising by more than 63%’.
Meanwhile, on the Italy-US route, the major commodity group is expected to be ‘macaroni, spaghetti and similar products (pasta), uncooked, not stuffed or otherwise prepared’, up by around 5%.
From France to the US, ‘casks, barrels, vats, tubs and other copper products and parts thereof, of wood (including staves)’ will contribute the biggest cargo numbers, however, trade is expected to fall 40% during the fourth quarter of the year.
Utilisation levels in the final quarter of the year will tighten on the eastbound transatlantic trade, as demand grows by approximately 8% and supply falling by about 10%.
Based on the latest trade data available at the time of this analysis, we estimate that the principle country pairs on the eastbound transatlantic trade during the third quarter of the year were the US to Turkey, the US to the UK and the US to the Netherlands.
These pairs are estimated to account for more than 30% of overall traffic moved on this route. A similar share is expected for the fourth quarter of 2018.
However, the growth rates of trade moved between these countries vary.
Trade from the US to Turkey and the US to the UK are estimated to have decreased by 4% and 1%, respectively, while containerised trade moved on the US-Netherlands trades is projected to have increased by 12%.
For the fourth quarter of 2018, MDST forecasts growth in the region of 5% on the US-Turkey and US-UK trades, whereas for the US-Netherlands route similar strong growth (12%) is expected.
Looking at the commodities, on a Standard International Trade Classification five-digit level, the strongest driver behind third-quarter growth on the US-Turkey trade was ‘ferrous waste and scrap’, up by more than 3%.
‘Non-specified appliances, which are worn or carried or implanted in the body to compensate for a defect or a disability’, rising 3%, was a key contributor to the 5% growth level on the US-Turkey trade.
On the eastbound US-UK trade a notable development on was a 20% drop in commodities classed as ‘other books, brochures and similar printed matter, not in single sheets’.
Westbound
On the westbound transatlantic trade, or Europe to North America, MDST anticipates demand to grow at a higher rate than supply, resulting in improved load factors.
Demand is expected to grow by more than 5% in the fourth quarter compared with last year, while supply is expected to increase by about 1% during the corresponding period.
Based on MDST’s trade data, it is estimated that volumes moved from Germany to the US increased by 16% in the third quarter of 2018 compared with last year.
During the same period, the other two major country pairs on this trade lane, Italy-US and France-US, are estimated to have seen an annual increase of 11% and decrease of 1%.
For the fourth quarter of 2018, MDST forecasts the Germany-US, Italy-US and France-US trades to grow by 2%, 7% and 4%, compared with last year.
On a SITC five-digit level, the main commodity driver on the German-US trade will be ‘photographic plates and film, exposed and developed, other than cinematographic film’, rising by more than 63%’.
Meanwhile, on the Italy-US route, the major commodity group is expected to be ‘macaroni, spaghetti and similar products (pasta), uncooked, not stuffed or otherwise prepared’, up by around 5%.
From France to the US, ‘casks, barrels, vats, tubs and other copper products and parts thereof, of wood (including staves)’ will contribute the biggest cargo numbers, however, trade is expected to fall 40% during the fourth quarter of the year.