European recession is impacting imports and exports, says Global Port Tracker

The specter of a recession in Europe appears to be more likely than not if it is not already happening and is reflected in volume numbers for European imports, according to the Global Port Tracker report from Hackett Associates and the Bremen Institute of Shipping Economics and Logistics.

Ports surveyed in this report include the six major container reports in North Europe: le Havre, Antwerp, Zeebrugge, Rotterdam, Bremen/Bremerhaven, and Hamburg.

According to the report, European deep-sea import growth for 2012 is expected to be in the 3 percent range. It added that the majority of growth is expected to be in the second half of 2012, as volumes through July are projected to remain lower on an annual basis. And total import volumes, according to the report, are expected to grow in three of the next four quarters, with annual gains expected for half of that duration.

On the export side, Global Port Tracker indicated that volumes are showing signs of weakness, with reduced input demand globally in January and February resulting in lower volumes. In spite of that, exports are expected to post gains over the next six months, save for one month, with May expected to be up in the double-digit percentage range, while exports are expected to be up 5 percent for all of 2012.

“There is no doubt that Europe is already in a recession,” said Ben Hackett, president of Hackett Associates. “Import growth in 2011 compared to this year was nearly twice as high. The second half should be a little stronger overall.”

With the lack of meaningful positive growth until the European economy truly comes back, Hackett explained things will remain at current levels—with little to relatively strong growth—through the end of 2012 and into 2013.

In the report, Hackett noted that as demand remains insipid for the next few months, coupled with large new containerships being delivered, pressure remains acute for ocean carriers serving these European trade lanes.

This comes at a time when carriers are facing challenges in regards to getting rate hikes to stick, an overcapacity situation, and increasing fuel prices impacting BAF (Bunker Adjustment Factor).

“Carriers are facing multiple challenges at the same time,” said Hackett. “Retaining market share and trying to keep utilization rates up are the two main ones. Those go hand in hand when you have more capacity coming into the market.”

In regards to the BAF, which can often represent roughly 50 percent of rates, Hackett said carriers are making continued efforts to reduce consumption, which Maersk did this week in announcing it is slowing down some of its Asia routes to 12 knots on the backhaul, with the headhaul at 18 knots. The slowing down of the backhaul, he said, can add a week to the service, while adding another vessel to its service and trying to reduce operational costs at the same time.