Mega ships deemed unnecessary for service in intra-Asia trade

WITH 31 million TEU and 100 port pairs, the intra-Asia trade accounts for one-in-four containers shipped globally each year

26 April 2019 - 19:00

WITH 31 million TEU and 100 port pairs, the intra-Asia trade accounts for one-in-four containers shipped globally each year. However, some domestic shippers are questioning the industry's march towards mega ships, reports London's Loadstar.

And, according Drewry director Han Ning, the rise of the 'ASEAN tiger' economies is deepening the region's trade ties, particularly between Southeast Asia and the Far East's 'older tigers' of China and Korea.

'Logistics providers in Asia will experience a very lucky period compared with the long haul trades,' Ms Ning said at the TOC Asia Container Supply Chain conference in Singapore.

'Long-haul routes from ASEAN stayed stable, other routes are losing market share and the only trade with remarkable growth is Far East-ASEAN,' she said.

Ms Ning said ASEAN trade with Japan was flat, and that rising imports from China and Korea were the chief drivers of growth. On China-ASEAN routes, for example, key commodities were machinery and electronics, textiles, metals, chemicals, plastics and rubber.

She said that the global average volume of import and export goods is 4-5 per cent, compared with a forecast 9-10 per cent in ASEAN over the next five years. The trade bloc averaged 5.6 per cent GDP growth over the past three years, with Cambodia, Laos, Myanmar, Thailand and Vietnam all 'star performers.'

Digging deeper, Ms Ning said the share of ASEAN merchandise trade declined in Singapore and Malaysia, but rose in Thailand and Vietnam, the latter the 'obvious superstar,' considering growth from just a four per cent market share in 2004 to 10 per cent in 2017. The share of exports in the Vietnamese economy - only seven per cent in 2011 - is now 13 per cent and forecast to hit 15 per cent by 2023.

The major ASEAN ports to benefit from the region's growth, she noted, were Vietnam's Cat Lai in Ho Chi Minh City, and Indonesia's Tanjung Priok in Jakarta, which now enjoy respective market shares of 11 per cent and eight per cent of ASEAN port throughput.

ASEAN shippers, however, appear to be baulking at the prospect of more ultra large container vessels (ULCVs) operating in the region. For example, Seaport Group chairman David Wignall said shippers in Indonesia had little appetite for the investment needed to construct more ULCV-capable ports.

'Shippers in Indonesia don't believe they need bigger ships, they argue that 6,000 TEU ships for intra-Asia services are large enough,' Mr Wignall said.

At a recent stakeholder meeting in Jakarta, Mr Wignall argued the case for more 18,000 TEU-capable ports, noting that otherwise Indonesia 'could get cut out of direct access to certain types of shipping.'

However, their counter argument, he said, was that only 5-8 per cent of containers need direct calls.

'This is the fourth-biggest country in the world by population and one of the most important maritime markets saying they don't need these large ships, and I think that's reflective of the views of quite a lot of shippers.'

He said the number of port pairs had dropped significantly over the last three-to-four years, meaning the ability to get cargo from A to B quickly had also decreased and, in many cases, increased inventory costs.

'Almost certainly these big ships may be doing well for shipping lines, but doing quite badly for the shippers and the supply chains they support,' Mr Wignall said.


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