Kuehne Sees China Sea Freight Boost Next Year After Flat 2015

  • No. 1 sea-freight forwarder will lag market growth this year
  • Kuehne sees Asia-Europe ocean trade up as much as 4% in 2016

Kuehne & Nagel International AG expects ocean trade between China and Europe to speed up early next year, giving the company a boost after its sea-freight unit falls short of this year’s market growth.

Volume on the Asia-European trade routes, with China accounting for about two-thirds of the cargo, will rise by between 1 percent to 4 percent in 2016 after declining as much as 6 percent this year, said Otto Schacht, chief of the Schindellegi, Switzerland-based company’s sea-freight division. The ocean-shipping business’s volume will be flat this year, failing to match about 2 percent growth in the global market, Schacht said. Kuehne had last said, in April, that its growth would be roughly in line with as much as a 4 percent market increase.

“Many European companies tried to cut their inventories this year, curbing Asia imports by as much as 30 percent, which took the industry by surprise,” Schacht said Thursday on the sidelines of the Hansa Forum shipping conference in Hamburg. “But many importers are bumping up orders again as warehouses are empty, which will boost container traffic in the first two quarters of next year.”

The world’s biggest ocean-freight forwarder, Kuehne & Nagel has shifted the unit’s focus to the U.S. import market and away from Asian exports as China’s international trade weakened amid an economic slowdown. The Chinese economy is on track for the most sluggish growthin 25 years.

Currency Impact

The industry also underestimated the currency impact as a weaker euro makes it tougher for exporters like China to stay competitive, said Schacht. “Chinese products have become expensive.”

The company’s sea-freight volume will probably reach 3.8 million standard 20-foot containers, or TEU, this year following a 1 percent decline in the first nine months, he said. Kuhne & Nagel, which competes with Deutsche Bahn AG’s Schenker unit and Deutsche Post AG’s DHL, has struggled to push through price increases at some larger customers, leading to a slight shift in focus toward small and mid-sized customers.

The global volume of container trade will probably grow in a range of 2 percent and 3 percent next year, and Kuehne & Nagel wants to outpace the market, the executive said.

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