US '08 CONTAINER TRADE GROWTH TO SLOW-EVERGREEN
Asian container trade growth to the United States will slow down in 2008, but flows to Europe from this region will be healthier due to the strong euro, a top Asian shipping official said on Monday.
Arnold Wang, chairman of Taiwan's largest box carrier, Evergreen Marine Corp said he expected to see growth on the trans-pacific Asian routes to fall in 2008 to a fifth of last year's, as the world's largest economy sank into recession.
"Even if the economy in America has a softer landing, we still expect to see some growth... maybe down to 2 percent from about 10 percent in 2007," said Wang, whose company together with 24 other shipping firms recently launched the Container Shipping Information Services.
Goldman Sachs said last week the United States was likely to tip into a recession, but despite this forecast Wang said he expected freight rates in 2008 to remain relatively positive. Growth potential expected from European economies such as Germany, driven by the strong euro -- which hit a six-week high versus the dollar on Monday -- would keep Asia-Europe container trade volumes healthy, Wang told Reuters in a phone interview. "We expect in 2008, European market to continue growing... especially with the high euro... and growth in the German economy," Wang said, without indicating the growth rate.
Banking analysts pegged the growth in Asia-Europe routes at 15-17 percent last year and expected it to hold at similar rates for 2008.
In a recent shipping note to clients, Citigroup Global Markets, Equity Research said that Europe, intra-Asia and Middle East container trade remained "relatively stable for now". "Were it not for U.S. inbound running at zero or potentially at a small negative, we would continue to see global container growth at 10 percent levels," the report said, adding there was a risk that growth could slip to 8 percent in 2008, on a slower U.S. economy.
Wang said demand for container shipping would also likely see a boost from non-traditional demand.
"We are seeing the transportation of (soft commodities) like bananas, fruits switch from bulk carriers to containers, because containers are safe, quicker and... cheaper," Wang said. In 2007, Asian grain consumers such as Taiwan turned more to containerised shipping to move soybeans and corn due to high bulk shipping freight rates and limited tonnage.
"For example, it costs only $10 to ship a TV set that sells for $700 and it costs only 15 cents to ship 1 kilo of coffee which retails at $15," Wang said.
Shipbrokers said for a 2,700 TEU container vessel working this route, chartering rates were about $28,000 per day, while for a comparable vessel in the bulker class, the 40,000 deadweight tonne handymax was pegged at around $50,000 per day.
Evergreen expects to maintain its shipment volumes on the trans-Pacific route at about 1.5-1.6 million TEUs this year, stable to the previous year, as it does not plan to raise its capacity this year, he said.
Wang expects the company to maintain trade volume shipments on Asia-Europe trade at around 1 million TEU.