Low Box Rates, New Alliances Tempers Carrier Shift to U.S. East Coast: Drewry

by Ship & Bunker News Team
Wednesday July 20, 2016

In its latest Container Forecaster report, Drewry Maritime Research (Drewry) says that low container freight rates, as well as the recent shuffle of container carrier alliances - set to take effect in March 2017 - have tempered a significant influx of new capacity on the Asia to North American East Coast trade that was expected to materialise after the opening of the expanded Panama Canal.

As a result, Drewry says that any further shift in cargo routeing from the North American West Coast to the North American East Coast will be gradual.

"Without doubt, the ability of the canal to handle much larger ships is a groundbreaking event and heralds a new era in which a large swathe of US importers will have a much wider choice of options routeing goods from the Far East. However, it will not all change overnight – the migration of seaborne cargo from the West Coast to the East Coast will continue to be a steady evolution," explained Drewry.

While Asian exports to the East Coast saw a 1.7 percent year on year growth in 2016's first quarter, Drewry says that those volumes declined in April and May by 3.9 percent and by 1.1 percent, respectively.

Drewry further notes that the American market is difficult to predict, noting that use of East Coast routes have been growing since mid-May, but it is impossible to say with any conviction whether this year's peak season is going to be a strong one or not.

In May, Drewry predicted that carriers would come under increased pressure in 2016 as a result of rising bunker prices that would lead to costs outpacing revenue.

Ship & Bunker News Team
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