Episode Transcript
[00:00:02] Speaker A: Hello and welcome to the Lodestar podcast. This is a very exciting episode as it's in collaboration with Container Trade Statistics.
[00:00:11] Speaker B: Here we are, 4.5% in July.
Nobody really expected we'd be at that point.
[00:00:17] Speaker A: If you're not familiar, CTS releases very regular TEU volume and price index data, which is just such an excellent insight into global demand.
[00:00:28] Speaker B: We're seeing the US offsetting their imports from Greater China, but Greater China finding other places to source its cargo distribution.
[00:00:37] Speaker A: I'll be speaking today to the CEO Nigel Pusey, to chat through what CTS has seen in its most recent data, which is for July volumes and pricing. And joining the discussion is the Lodestar's Managing editor, Gavin Van Mahl.
[00:00:53] Speaker C: Asia to the secondary trades will just continue these stellar growth rates for the remainder of the year.
[00:00:59] Speaker A: We will be discussing global volumes, which trades have seen a big boost in demand versus trades that have seen less so, plus possible reasons for these. And of course, we finish the episode by taking a look at what we might expect going into the remainder of the year.
[00:01:15] Speaker D: So without further ado, let's get on with the episode.
Hello to my wonderful guests for this episode. Nigel and Gavin, thank you for joining me. It's great to have you both on.
[00:01:26] Speaker B: Thank you. Looking forward to it.
[00:01:27] Speaker C: Thank you very much, Charlotte.
[00:01:29] Speaker D: So we're here to talk about the current dynamics and trends in the ocean freight market.
But before we get into all of this, Nigel, we'll start with a very easy question. Can you please briefly introduce yourself and what you do over at Container Trade Statistics?
[00:01:45] Speaker B: Nigel Pusey. I'm CEO of a company called Container Trade Statistics. I have a history of more than 30 years plus in container shipping with P&O, OCL, P&O, Nedloid, AP Monomasc, and in other shipping companies like inchcape. I've been CEO for three and a half years. CTs is the provider of global container statistics and its USP is that it effectively takes that data directly from the shipping lines. So we work as a global agent for Worldliner Data Limited, which is owned by the container shipping lines that are our members and they provide us their manifests on a monthly basis. And that's why our data is accurate, because it is effectively coming from their internal data drivers for invoicing, et cetera. For Customs, we have around 75% analysis by line. We, we take out the further 25% from customs data from other port filings, but also from market intelligence from the lines themselves. So we provide 100% of the global commercial volumes that are moved in the global container market.
[00:02:59] Speaker D: Yeah. Your data is very, very useful indeed. And you recently released your July data.
So we're going to start on very broad terms. Can you kick off the discussion by giving us some insight into what kind of volume movement we're seeing globally?
[00:03:14] Speaker B: Yeah, we've been saying for the last three months we've had an incredible three months. You had the third month in a row of volumes over 16 million, and in fact, in July we did 16.57 million TEUs. That was 5% up on this time last year. And it's on a year to date basis, we're 110 million for the first seven months of the year and that's up four and a half percent. And if you roll that back one more year, we're looking at now a 12% increase on July 25 over 23. So it's particularly unusual if you compare it with the, let's say five, six years before that. We've had a 12% increase in these first six months. So it's quite a fascinating period of global growth in container shipping.
[00:04:01] Speaker D: Yeah, these positive numbers are really interesting to me. Maybe it's because I'm in the media, so I'm hearing all these extreme stories in container shipping all the time, but I've been getting a really bleak picture of the market over the last few months. I mean, there's been port congestion in Europe, the ongoing Red Sea crisis. Recently we saw 11 consecutive weeks of rate declines on the spot rate indices and of course, the wave of tariffs that have had everyone on their toes since February. So clearly, I mean, despite all of this, overall demand has remained strong. But surely this is not the situation on the Trans pac.
[00:04:35] Speaker B: Well, interestingly, just put it slightly in perspective.
It may sound contradictory, what we've just been saying, but actually it sort of fits because you have to remember that those 11 weeks that you're talking about is the moment from Bookie and our data, because we're talking up to the end of July, you're looking at bookings that were probably taken in July for shipments that would be taking place at the end of July or early August.
So I think, you know, without being too speculative, I think we can be fairly sure that our August listings are going to be well below 16.5 million of all the reasons that you've just described. So I think we are starting to sit. But to your point on the Trans Pacific, and we are actually only 1% down year to date for the Transpac versus this time last year. But that masks the fascination that we have, the Greater China to US is down 11%.
But interestingly, and we can talk about this a bit later, but we're up over 20% for Southeast Asia. And that 20% in Southeast Asia is offset the declines in China. So what's fascinating here is that the US obviously in anticipation has started to shift its importing of cars or whatever the commodity is, and they are effectively managing to soften the blow of that 11% decline in China. And the interesting thing about that is, and this puts it into context, the freight rate has collapsed around 60% from this month to this time last year. So on our freight rate indices, which is trapped on real invoices from the lines, we're seeing that massive decline in freight rates year on year, we saw a 21 point decline. That's around 20%, slightly less just from June to July. So yes, we are seeing the collapse in the freight rates, but the feed through in volumes is probably likely to come in August and September.
[00:06:35] Speaker D: And Gav, what Nigel's saying, I mean, you're speaking to forwarders and shippers every day that deal with the Trans Pacific trade. Is this kind of similar to what you're hearing anecdotally?
[00:06:45] Speaker C: Well, you'll be hearing a lot of things anecdotally. I mean, so just to reemphasize that the data that we're looking at today is very much is for July. And if we cast our mind back to July, you know, you go into the last weeks of June, beginning of July, we're all waiting at that time for the 9th of July deadline. That was when the 90 day pause on the reciprocal tariffs that were introduced on Liberation Day was due to expire. And of course the sort of hypothesis is that at least two weeks before July 9, no one would be loading any cargo because they're waiting to see what happens on July 9. And the supply chain time on the Trans Pacific tends to be two to three weeks. What then happened, of course, was that on July 7th there was a further pause that took it up to August 1st. So in theory July should have been, and I'm going to be using air quote marks a lot, which is no help at all in an audio podcast, but in theory, July should have been a normal trading month. But you know, if we looked at the sort of port throughput figures that were being reported by LA and Long beach, it would appear that a lot of the wins, so to speak, of the pause actually took place in June, which meant that July volumes weren't lifted by the pores at all. But there was still a large amount of capacity on the water that had been placed during June.
[00:08:07] Speaker B: I think you can see that, Gav, because in reality, you know, the June lift was 2.1 million and July is just fractionally higher, a mere 20,000 to use. So, you know, June and July were healthy lifts out of the Far East. I mean, they were slightly down on this time last year, but you remember that was at a time of higher freight rates. We're looking here at what I would say you're right, a pretty normal month. With the one difference that we've got this shift of around 150,000 TEUs out of China and now coming out of the likes of coming out of Southeast Asia. And there are certain countries that are fascinating within that that really give you a feel for how people were going. I'm going to change my sourcing.
[00:08:54] Speaker D: Well, Nigel, I mean, as you mentioned at the beginning, the CTS database, the global volumes have been exceeding 16 million TEUs for three consecutive months. So where on earth is all of this cargo going? Presumably you're able to see that in the data.
[00:09:09] Speaker B: It's quite fascinating because, you know, whilst the North America broadly is flat for both exports and imports at the moment. So putting North America aside, where is the changes? Well, the first one I think we should look at because that's the big volume number is movements out of Asia in general. But Europe imports is probably the place we look at to focus the first section of this.
So we look at Asia into Europe. At the moment we're looking at a 9% increase year on year, which is quite phenomenal really, because if you think about it, we don't see that in GDP in Europe at the moment. We've got all the challenges of going around Africa and not going through Suez and yet we're still seeing a 9% year on year increase. It's a big increase year on year. And if you go back to 23, there's 15% up on 23. So that's quite a big increase.
But that only gives us part of it because we're also seeing increases in into places like India, South Central America and sub Saharan Africa. You know, India so far this year has had a 14% increase. South Central America is up 14% as well and Sub Saharan Africa is 27% up.
I think we worked it out is about 5 million increase in TEUs. 1 and a half of that is Asia going into those three regions.
So, you know, interestingly, we're getting global growth.
We're seeing the US Offsetting their imports from Greater China, Southeast Asia, but Greater China finding other places to source its cargo distribution. Individual shippers are going. Well I'm not going to ship to America, but I found a great market in West Africa like Nigeria up massively. Argentina is up 100% on a year to date basis. Got some very interesting geopolitical changes where people are moving cargo to places they hadn't thought of to do before.
[00:11:08] Speaker D: This bit about Europe is really interesting because is this all linked to the port congestion, this sudden increase in imports?
[00:11:14] Speaker B: I don't think so, to be honest, I don't think we can find any particular reason.
I think if you look at the breakdown actually the biggest increase isn't where the port congestion is talked about. The biggest increase is in the East Med. Now fascinatingly in the East Med, what you're getting is a lot of new entrants, a lot of lines, smaller mid sized lines out of Middle east and India and down to Singapore who can go through Suez are using the opportunity of having short transit times into the likes of Egypt and Turkey and using that as a marketing opportunity to the likes of India and the Far east which is allowing this growth in volumes. So if you look at India into Europe, that's also up nine and a half percent.
Far east up nine percent and the largest part of that growth is around 13% into the East Mediterranean area. And I think that's more that you are seeing opportunities arise through these new entrants and they have got a competitive advantage if you like, about those who are. You know, if you go around South Africa you're having to do 21, 22 days from likes of Singapore to Istanbul and it may even be longer. Whereas if you can go straight through Suez, you're probably doing it in less than 10.
It might be many other reasons that are driving it but you know, it doesn't seem to be European gdp.
[00:12:39] Speaker C: I mean I certainly during these summer months, you know, one of the things that I was looking for was like when the peak season would take place and how the diversions around the Cape of Good Hope have sort of elongated that Asia, Europe supply chain. I mean I never detected this year any sense of the sort of normal hecticness that you get around a peak season. You know, escalating rates, reports of space allocations not being met, rollovers, all that sort of stuff that normally characterizes a peak season. I didn't see any of this. I mean I would have freight forwards reporting the odd bouts of space tightness at certain ports in Asia at Certain times, but there was no sort of long term trend and most of those were very much sort of local factors.
[00:13:24] Speaker B: Quite interestingly, and I think this is exactly to your point, the Far East Europe freight rate index this time last year I think our index was 181 and now we're down to 96. Yeah. So I think hecticness that you saw last year was driven by the fact that freight rates were incredibly high.
So is the low freight rate driving demand and then spreading it? Because people are not panicking about, oh, it may cost me more to do this that they were doing this time last year.
[00:13:54] Speaker C: I think the sense I got was that what happened in 24 was there was certainly people loading earlier than they would do because it was just taking two weeks longer, minimum. Right. To get from Asia to Europe. And I think the sense I've got is that basically supply chains, they've become a bit less seasonal on this trade.
Yeah, it's just, you know, there's, there's, there's a, there's a ton of capacity. You've had the alliances redoing their networks, etc, and it just seems to be that the supply chain between Asia and Europe is, is actually weirdly working in a more orderly fashion.
[00:14:26] Speaker B: Well, I agree and I think it's amazing. You know, we're 18 months into the non series and yet in reality this has become the new norm, you know.
[00:14:36] Speaker C: Yeah. And I think at the moment no one could actually envisage going back through Suez unless you're one of the sort of niche operators that you highlighted earlier.
[00:14:45] Speaker B: Yeah. And I think they built their networks when they rejigged in February with the assumption that that was going to be the case. I tend to agree with you that I think what's happened is it's just stretched the supply chain and that just means that you cannot rush cargo in relatively quickly. You have to have a different strategy for how you purchased and that just requires you to do it over longer. And the advantage of that, by spreading it has probably fed into a slightly softer freight rate.
[00:15:11] Speaker C: It's more the sort of conveyor belt. My understanding this is when container shipping actually is best optimized is actually when it's just a steady procession of boxes rather than, you know, peaks and troughs.
[00:15:23] Speaker D: What's also interesting, I know that we're here to talk about the ocean freight market, but the air freight market to Europe has picked up a massive chunk of North America's reduced capacity as well, since removed their de minimis back in May. But also the road freight Rates in Europe have been just really low. So I mean, could this increased demand or, I don't know, the steady demand perhaps change the fortunes of haulers in Europe?
[00:15:47] Speaker B: It's slightly strange. You would expect if you've got a 9% increase and 15% over two years, you would expect European hauliers, you know, I suppose is that because there's a drop in inter regional cargo if you like, as opposed to haulers having to pick up their normal stuff from container shippers.
It seems very murky at the moment. We can't quite understand why Europe's had this big increase and these offsetting decreases elsewhere.
[00:16:15] Speaker C: Very hard to reconcile it with the gdp.
[00:16:17] Speaker D: A very interesting one to watch, I think. But Nigel, you had mentioned that there were a few trades that had seen a jump in volume. So was there another one that stuck out to you?
[00:16:27] Speaker B: I think the one that really is quite eye watering is this China to Africa.
I mean this is not massive volumes, but we looked at this, you know, 27% up this year. This is primarily east coast and west coast. On the east coast, I think it's DP World has just taken over the terminal in Mombasa and everything I'm hearing about that is that suddenly Mombasa is working really well and we're starting to see confidence of shippers taking cargo into a country like Kenya. So it's quite fascinating. And the one that really is eye watering is the west coast and in Nigeria is up around 98% I think in this month and around 60 odd percent in the first seven months of the year.
So it's quite fascinating to see these areas picking up. And again, they're not going to make the gaps in America on their own, but alongside India and South Central America, they're making quite a considerable impact.
[00:17:23] Speaker C: Yeah, I mean, in terms of line of services, it's a very, very dynamic market. MSC has a trunk service between Asia and West Africa called the AFL service.
And in April they introduced their first 24,000 TEU Ultra Large Container vessel to this trade.
Far bigger than anything that had been seen on that trade before 25 years ago.
You know, the largest vessel on that trade was 1,800 TEU. And it was a geared vessel. Most importantly because the ports didn't have the infrastructure. So you go forward 25 years and since the beginning of June, MSC have basically transformed this AFL service. It now runs 14 vessels between 22,000, 24,000 capacity. That's a huge amount of capacity each week. The real reason why they can do this is following MSC'S takeover of Amore's West African ports network, which took place a couple of years ago. Big deal at the time. They've seen through these investment programs. And the four ports that this AFL service calls at are Tema, Lomay, Abidjan and Krivi. And all of those have been fitted now to handle these ULCVs. And interestingly, we were talking about the growth in the Mediterranean earlier during the big sort of congestion problems that they had in the MED in 2024, MSC actually experimented with using Loma as a transshipment point for Mediterranean traffic. So they'd already started sort of testing and trialing and operating these ULCVs. I did a bit of research on the demand thing and came across some data from China Customs. And this is July to August data.
And this is just exports in terms of value. But basically exports from China to Nigeria have grown by 50% year on year between June to August this year compared to June to August last year.
And the real driver of that appears to be the Belt and Road Initiative. And the Belt and Road Initiative is obviously contracts awarded to Chinese companies to do construction projects in Nigeria has a huge amount of them. And the Economist wrote an article on it earlier this week saying that a lot of the exports are construction equipment that's going into these countries.
And my theory is that what China has effectively done is creating new import markets for itself funded by BRI, just.
[00:19:54] Speaker B: To back up yours. And across those four ports, yeah, Nigeria is up 40% year on year. Ghana is up, I've got 30, 32% at actually 50% on two years ago and Ivory coast is up a massive 60% year on year. So, you know, across all the ports that you just described, you've got this almost consistent increase. And I'm not surprised what you said there. This isn't sort of something they thought of at the last minute. This was a strategic decision that they needed to have that cargo. And you know, if there was going to be a problem with tariffs, they needed to find other places to send their goods.
[00:20:31] Speaker D: Well, speaking of those strategic decisions, I want to kind of loop back to something that you mentioned at the start of the discussion, Nigel. Obviously there's been this decreased US reliance on China and you mentioned that the US markets were starting to source from other places like Southeast Asia. Do you think this is a long term trend? What's your thoughts on this?
[00:20:53] Speaker B: Personally, I just wonder whether there's really the capacity in these countries to fill this sort of volumes on an ongoing basis for a long term. But just to Put some context to the numbers in the year today. Vietnam 22% up year on year. Indonesia, 24%, Cambodia 33%.
And interesting, when the tariffs came in, they were 19% for Cambodia and Indonesia and 20% for Vietnam.
So it's possible that this will all start falling off again because some of the Chinese ones have been paused and now we've got tariffs on the countries where the switches have happened. So I think there's a number of fascinating plays going on there for the rest of the year.
[00:21:37] Speaker C: Do you think a sort of analysis of the Inter Asia trade will reflect this, given that some of those sourcing locations you're talking about, they're not direct port calls? If you're a major clothes buyer in Europe and you're sourcing from Cambodia, which many do, you're not getting your goods loaded onto a 22,000 container ship at Sihanoukville. You know, there's a lot of secondary movement going on.
[00:21:58] Speaker B: There is. And I think in one of your articles recently, you talked about the Inter Asia freight rates being kept up as a sort of contrast to others.
And so our Inter Asia data only talks about the movements that are Cambodia to China rather than the transshipment elements, interasia trades. It's a difficult number to get accurate, but 5 to 6% increases in in Asia at the moment, there's a strength in those Asian economies which is being underpinned by transport between themselves as well as this reach out to the US or the European. It's not going to be equalized to Far East Europe and North America, but it's certainly spreading and that's surprising everybody. When we come back to that global data, Here we are 4.5% in July.
Nobody really expected we'd be at that point.
[00:22:49] Speaker D: You've been looking at the TU and pricing data for each trade lane every month. So, I mean, you've really been exposed to the dramatic shifts that we've seen this year. I won't ask you for any specific prediction, but do you think that the data that you've got for the previous months gives us any indication of what we can expect going forward?
[00:23:08] Speaker B: I think unlikely, actually. And you know, I was asked this question back in June and I wasn't expecting another 5% in July and August. So I definitely wouldn't try and predict it. But I think inevitably we are going to get some softening. I think there has been this buildup. We've got a golden week coming up. I think we're going to get some softening that we haven't Seen. But I don't think it's probably going to be at the levels we originally thought. This year we've had the network changes, we've had the tariffs. I think all of that has probably forced a bit of liftings into the first half of the year. So I think the second half will be a little bit softer.
[00:23:43] Speaker D: And Gav, what factors are you looking out for for the remaining quarter?
[00:23:47] Speaker C: Okay, well, unlike Nigel, I'm in the happy position that I can make wildly speculative predictions.
No matter if I'm wrong. Right.
Next time around, Nigel can score my crystal ball gazing skills. Okay, so the first prediction is that the Asia to the secondary trades, subsequent power in Africa, south and Central America will just continue these stellar growth rates for the remainder of the year. Number two, Intra Asia becomes even more dominant than it already is. And then finally, because both of those are actually quite safe bet, here's a, here's a googly for you.
I reckon that we might actually see some strong growth in the eastbound transatlantic trade in the next few quarters.
[00:24:30] Speaker B: That is definitely a googling.
[00:24:32] Speaker C: Okay. I just think, I think I've got a feeling that I think there'll be demand in Europe for certain U.S. goods. I suspect that the dollar is going to decline in terms of its value and it seems to me that that will make a whole load of what I call the midlife crisis goods. Motorcycles, bourbon, whiskey, denim type clothes.
It makes them cheaper and I can see that suddenly things like Harley Davidson's. If you wiped off 10% of the value of a Harley Davidson because of the declining value of the dollar and.
[00:25:02] Speaker B: With a relatively limited tariff. Yeah, I mean, you know, we are going to score you on that one because I'm going to keep that one. Yes. So I'm expecting to see a sizable increase in the rest of the year.
[00:25:11] Speaker C: But you won't see it reflected in the price index.
[00:25:13] Speaker B: No. No caveat to that.
[00:25:15] Speaker C: No.
[00:25:16] Speaker D: Well, I think we will all be keeping a close eye on the container trade statistics, monthly press releases to see what transpires there. I also do want to mention that this week marks the start of London International Shipping Week. I will be in and around London attending some of the events and I believe container trade statistics will also be around.
[00:25:35] Speaker B: We certainly are. We're out in our full force and we'll be around at many events at lisw. So we look forward to meeting customers or anybody who's going to be attending.
[00:25:45] Speaker D: I look forward to catching up with you there. Thank you both so much for joining me and thank you all for listening.
[00:25:50] Speaker B: Thanks very much, Charlotte. It was excellent. Thank you.
[00:25:53] Speaker C: Thank you very much, Charlotte.
