A report released by Drewry said many deep-sea carriers are losing money by the millions on international routes, while regional routes tend to return much more operating profit. No other regional market is growing faster than intra-Asia, Drewry said, and carriers such as Maersk Line, NYK Line, Hapag-Lloyd and Cosco have expanded intra-Asia service in the last year.
“Seldom does a month pass without the announcement of at least one new regional service, some of which now deploy vessels over 4,000 TEUs,” Drewry reported. “There is money to be made out of such services.”
Maersk Line and CMA CGM were the top performers in return on sales in the first quarter — Maersk reported a 6 percent return while CMA CGM posted 4.8 percent return on sales; Wan Hai and OOCL followed as the third and fourth carriers in terms of return on sales on those routes. Wan Hai, which reported a 1.7 percent return, is considered an intra-Asia specialist, while 53 percent of OOCL’s total traffic came from intra-Asia, Drewry said. OOCL saw a 1.2 percent return on sales.
The intra-Asia market, including service from Asia to Australia, was also OOCL’s fastest growing in terms of volume in the first quarter of 2014. Its intra-Asia trade grew 14.5 percent year-over-year, tallying 723,000 TEUs in the quarter, while the rest of its global volume increased just 3 percent.
Drewry said regional carriers are joining forces to compete more effectively against the bigger players in an effort to limit further capacity growth on certain trade routes.
While Drewry noted it is hard to quantify the growth in intra-Asia trade, mostly because there is no centralized data source and because trade includes that both within countries and between them. However, members of the Intra-Asia Discussion Agreement have reported transporting 9 percent more cargo on intra-Asia routes, a total of 7.2 million TEUs in 2013.
“To put this in perspective, that is more cargo than was shipped between Europe and the whole of North America in 2013 (6.7 million TEUs), and over double (the market’s) annual growth rate of 4.3 percent,” Drewry said.
IADA is an informal discussion agreement comprised of 11 lines operating containerized services on the intra-Asia lanes.
While intra-Asia trade market is markedly smaller than some global trade routes, experts believe it could signal trends. Jim Blaeser of the consulting firm AlixPartners said the small gap between intra-Asia trade and global trade could show indicate future growth in the global market.
"Typically, when the intra-Asia trade growth is higher than global trade growth, it's a good sign for the future of global growth, since so much of the intra-Asia trade is base materials and semi-manufactured goods,” Blaese said during a conference call with Stifel this month that concentrated on the global container trade outlook. “So it's good to see intra-Asia freight moving with a little bit more velocity or volume. It means that good things are coming down the pike."
