Overcapacity, not trade war, cause for softening Asia-USEC demand: Drewry

Overcapacity, not trade war, cause for softening Asia-USEC demand: Drewry

Overcapacity, not trade war, cause for softening Asia-USEC demand: Drewry

LONDON: The “sudden decline” in container shipping demand had less to do with prospects of a Sino-American trade war and more to do with oversupply in the Asia-US East Coast market, according to Drewry. “It is tempting to view every service suspension through the prism of the brewing trade war between the US and China,” said Drewry.

“However, the cutbacks seen on the West Coast are also a corrective measure to the low utilisation within that trade, and the 2M-ZIM changes on the east coast might have more to do with chasing greater scale economies and cost-saving at a time of low profitability, without actually reducing capacity,” said Drewry.

Despite this, Drewry believes the agreement between 2M and ZIM may portend “greater storms” ahead, if and when additional tariffs come into play. “Details of the service and deployment changes have yet to be announced, but it is almost inevitable the joint capacity will be reduced, although that could be mitigated by introducing larger ships on to the new services,” Drewry said.

Manjula

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