The US-China trade war has reduced container demand between the two trading partners but increases on other trade routes have lifted overall demand globally
The chart shows how the imposed tariffs (List 1, List 2 and so on – see timeline) have impacted the direct trade of container vessels between China and the USA1 measured in billions of TEU nautical miles2.
Container demand actually increased when List 1 was imposed as shippers scrambled to import goods before the deadline. List 2 saw another slight fall before container demand bounced back only to dip sharply with List 3. Since the beginning of 2019 the container trade between China and the USA has decreased significantly and is hovering around the 2.5Bn TEU nautical miles level.
The fall in the TEU demand between China and the USA will have dampened growth but overall demand has grown. Demand growth in terms of total TEU capacity of the large container ship fleet (post-Panamax and above) being utilised has been strong.
Over the past three months demand has grown by 2.3% versus a growth in vessel supply by total TEU capacity of 1.7%. This has certainly been one of the drivers for the significant rise in charter rates over that period. However, on an annual basis, supply growth at 4.9% has outpaced demand growth at 3.3%. Over a five-year period, demand and supply have been fairly well balanced with demand growing at 33.5% and supply at 33.1%.
Support for container ship demand growth has come from the southeast Asia to northwest Europe trade which has grown by 11% in the last three months.
The above figures and charts have been derived from the new container module of VesselsValue’s Trade product. VesselsValue’s chief operating officer Adrian Economakis said “The container trade module provides a data-driven approach to understanding container ship demand, updated in real-time and derived from individual vessel journeys.”
Note 1: This applies only to container ships sailing direct from China to the USA. No way port calls are included. Note 2: Container ship fully loaded TEU multiplied by distance sailed.