After years of double-digit growth in container shipments to the Middle East, a softening of demand in the last 12 months is continuing to dampen rates, according to Omar Shamsie, Maersk Line chief executive for the West and Central Asia region.
Recent demand spikes have reflected the impact of the traditional peak export season from China or been linked with religious holidays in the Middle East. “Both have caused seasonal space pressure,” he said.
“Although seasonal peaks drive rates up in the short term, overall rates continue to be depressed and do not allow for an acceptable return.
“Having said that, we continue to review opportunities and aim to grow with our customers' requirements.”
The Asia-Middle East trade remains among the world's largest by volume. It has also proved a useful home for carriers looking to cascade vessels from the Asia-Europe trades as new ultra-large container ships are added to the global fleet. But these supply additions have also exerted downward pressure on rates.
“Some services have been introduced and/or upgraded and others have been withdrawn,” Shamsie said. “So, overall, we have witnessed supply growth in line with demand on this trade.”
Maersk does not currently provide connections from gulf ports to its Daily Maersk service, which offers guaranteed shipping times on Asia-Europe services. Adding a link from the gulf is not yet on the horizon, Shamsie said, but that could change as customer and market requirements evolve.
Maersk currently uses DP World’s Jebel Ali facilities in the United Arab Emirates as a transshipment hub for gulf cargo. From there, cargo is sent to the final destination via a mixture of third-party feeders and Maersk-owned feeders.
“India is covered via direct services and as such no transshipment via the UAE is required,” he said. “We have direct calls in Sharjah and use Jebel Ali for transshipment to East Africa and the Indian Ocean islands.”
However, proposals to build a pan-Gulf Co-operation Council rail network in the coming decade linking the six GCC members states — Saudi Arabia, Kuwait, Bahrain, the United Arab Emirates, Oman and Qatar — could eventually transform shipping strategies by offering carriers an alternative to using feeders for regional distribution.
“Due to road restrictions in the GCC countries, carriers are forced to feeder cargo to the final destination, sometimes only 50 kilometers away,” Shamsie said. “Rail should allow carriers to discontinue feeder options and set up rail sidings and depots.
“Connectivity with Saudi Rail means that alternative routings will become available.”
Contact Mike King at firstname.lastname@example.org.