The first half of 2017 witnessed the introduction of the new shipping line Alliances which have had a major impact on the Asia to Europe routes in particular. We have seen the industry consolidate from 7 Alliances five years ago to 3 mega Alliances in 2017. They are now fully embedded and operating very well.
The Shanghai Index remained stable throughout the year indicating an overall market cohesion and reflecting the ability of the new Alliances to adjust capacity relatively quickly if there are seasonal declines in demand.
The China to Europe rail service gained a lot of interest and press in the early part of the year. This is a route to market that we are monitoring closely. At present the service of transits into the UK is not comparable with the fastest sea freight options and the cost is considerably more. However into mainland Europe, the transits are good and offer a potentially viable alternative to sea/air. The UK product will continue to improve and evolve in 2018 and we will keep you updated of developments.
The air freight demand has been exceptionally high in 2017 compared to recent years â€“ we are seeing the demand increase directly related to the growth in e-commerce.
Looking ahead to 2018â€¦
We will see a further consolidation of the shipping industry with the introduction of the joint venture of NYK, MOL and K-Line in April 2018. The Alliances will then consist of 9 carriers, which is a stark contrast to even 3 years ago when there were 7 carrier pools consisting of 17 carriers.
We expect demand overall to be roughly the same as in 2018. The major unknown presently, as we enter 2018, is how the Brexit policies and plans will unfold throughout the year and any impact these may have.
As we enter January 2018 and approach Chinese New Year (16th February) we will see the demand for space from Asia increase dramatically. As usual we are working very closely with our customers to plan and execute the smooth shipment of all cargoes ahead of, or during, the Chinese New Year period.
At PFE we remain absolutely committed to providing the best levels of service to ensure your goods move as planned, be it via any mode of transport, from the many geographic locations we work directly within.
We would like to thank you for your support in 2017 and look forward to working together in 2018.