3 Major Shipping Lines NYK Lines, Evergreen Line and Mesina Line Quits From Nigeria

 

Following the crash in freight rates, due to the downturn in shipping along the Asia-West Africa trade routes, three major shipping lines have called it quits from the country as business is no longer profitable.

Asia-West Africa route has Nigeria as a major destination, with the country accounting for over 60 per cent of the total cargo volume coming to the sub-region.

The shipping lines in question, NYK Lines, Evergreen Line and Mesina Line, have withdrawn their vessels and diverted them to other routes in the past four months.

Last November, Nippon Yusen Kaisha, popularly known as NYK Lines, had to withdraw from the West Africa route due to growing losses as a result of the twin jeopardy of low freight rates and declining volumes.

The top Japanese shipping line had operated the Asia-West Africa service, which it dubbed WAX, together with Hapag-Lloyd and Gold Star Line (GSL). The service featured two calls in Nigeria, Lagos-Apapa and Lagos-Tin Can.

Taiwan’s Evergreen Line, another major shipping line, has also announced the withdrawal of its vessels from the Asia-West Africa route, which had regular calls at the Lagos Port Complex, Apapa.

Hull Blyth Nigeria Limited, which acts as the shipping agent to Evergreen Line confirmed the withdrawal of the service to an industry journal, Ships & Ports Daily, recently.

“After three years of serving the market, Evergreen decided to discontinue their service (WA1) due to losses sustained from widening disparity between rate levels and costs. Rate levels especially from Asia have fallen over 50 per cent in the period with the cost levels remaining disproportionate,” said Managing Director of Hull Blyth, Christian Holm.

Messina Line has also reportedly withdrawn from the Nigeria route for the same reasons of widening operating losses. The company, which has made regular calls to Apapa and Tin Can ports for over a decade, has now restricted its Africa schedules to Asia-East Africa and Asia-South Africa routes.

UK-based independent maritime analyst, Drewry Shipping Consultants Limited, believes more lines will quit the Asia-West Africa route as container volumes continue to fall, resulting in reduced vessel load factors and declining freight rates.

Data from container trades statistics shows that southbound volumes from Asia to West Africa decreased in nine of the first ten months of 2015; compared with the previous year, with the most recent year-on-year declines reaching 10 per cent.

“The lacklustre demand in the trade has forced carriers to curb any growth to capacity with the monthly count of available southbound slots generally static in the last few months,” Drewry said.

It noted that southbound utilisation levels on vessels fell to 64 per cent in October, versus the low-70 per cent range of a year ago.

Spot freight rates have subsequently plunged to around half of their average value of last year, and stood at around $1,800 per 40ft towards the end of 2015.

Drewry said the situation on the trade had gone from “bad to worse”, “showing no signs of recovery”.

Cargo volumes, which have dropped by more than 30 per cent in a year and together with the fast-depreciating naira, which has lost more than 100 per cent of its value in less than two years, has exacerbated pressures on shipping lines and terminal operators some of whom were forced to cut their workforce in 2015.

Also the inability of importers, including manufacturers, to access foreign exchange (FOREX) due to government’s fiscal measures, has made it difficult for shippers to bring in their wares leading to the sharp drop in cargo volumes at ports.

This has equally made cargo lifting on the Asia-West Africa route quite unattractive with Nigeria accounting for 60 per cent of the cargo volume destined to the entire sub-region.

“The West Africa route is no longer profitable for any line today because of the poor condition of trade. It has been so for more than two years. Only the big lines are able to absorb the losses for now but I really don’t know for how long they will be able to do so,” Mike Stevens, a shipping analyst told the industry journal.