Drewry: Middle East Demand on the Rise

Demand growth from Asia to the Middle East topped 26% in the first quarter of 2018, but freight rates continue to fall because of chronic over-capacity, according to shipping consultancy Drewry.

After a long period of stagnation, the Asia to Middle East container trade went into overdrive in the past few months.

Saudi Arabia, the second largest Middle Eastern importer of Asian containerised goods, increased its first quarter inbound volume by 26% to 227,000 TEU. The second largest contributor in terms of additional container imports from the Far East was Qatar, which saw its container imports from Asia nearly triple in the first quarter of 2018 to 62,000 TEU.

Other countries to post double-digit growth in the period were Iraq, Iran, Oman, Kuwait, Egypt, Jordan and Bahrain. The biggest importer, the UAE, increased its volume from Asia by 8% to 275,000 TEU, while traffic in war-torn Yemen decreased by 21% to 8,700 TEU.

Trade from Asia to South Asia has for the most part been much brisker than to the Middle East over the past three years, although a relatively poor showing in the second half of last year reversed the trend. Westbound container traffic to South Asia lagged behind the soaring Middle East for the third consecutive quarter in 1Q18, but it did still register very healthy growth.

However, the resurgence in South Asia container handling may be short-lived as stevedores across 12 major Indian ports are planning to go on an indefinite strike at the end of this month in a dispute over wages, pensions and working conditions, Drewry said.

Robust demand from Asia to South Asia and the Middle East has seemingly encouraged carriers to add more capacity to both trades, despite the fact that both were already over supplied and struggling with ever-decreasing freight rates.

“The demand outlook is brighter for the Middle East currently as labour issues could hinder growth in South Asia. Outside of fuel-related increases, neither trade can expect spot rates to improve until chasm between supply and demand is addressed,” Drewry concluded.