1st March, 2023: The fourth quarter of 2022 was defined by a slowdown in unitised traffic on the island of Ireland, as global inflationary pressures finally began to affect the volume of merchandise goods handled at ports. RoRo and LoLo traffic in Ireland and Northern Ireland declined on an annual basis, pausing momentum that had been built in the first half of 2022.
RoRo traffic at Republic of Ireland ports declined by 3% year on year in the fourth quarter of 2022. Due to the disruptive effects of COVID-19 and Brexit throughout 2020 and 2021, 2019 is an effective benchmark to compare 2022 volumes. Q4 2022 recorded just over 295,000 RoRo units, an almost identical total to that handled in Q4 2019. Despite its close comparison with 2019 levels, the volume of RoRo traffic recorded in Q4 2022 represents a relatively underwhelming performance for the sector. Even with the spikes in traffic volumes throughout the COVID-19 and Brexit period, a growing RoRo sector in Ireland would expect to average approximately 300,000 – 305,000 units per quarter. In the first half of 2022, such volumes were evident and signs were positive. In the latter half of 2022 however, the negative economic headwinds, predominantly inflation, began to show, and the sector failed to surpass 300,000 units in both Q3 and Q4.
However, despite the recent slowdown in traffic volumes, the gains made in the first half of the year were enough to ensure 2022 was still a record year for RoRo traffic in Ireland. RoRo traffic surpassed 1.2 million units for the first time, above the previous peak of 1.19m units reached in 2019.
Prior to Brexit, the RoRo sector was comprised of roughly 1 million units on ROI – GB routes, and 200,000 on direct EU routes. In 2022, it is comprised of roughly 800,000 ROI – GB units, and 400,000 direct EU units. The shift has been driven by post-Brexit trading arrangements. Post-Brexit, traffic on ROI – GB routes has declined significantly, while traffic on ROI – EU routes has doubled. In short, this has been drive by the following three main factors; the decline in the use of the UK Landbridge, a decline in Northern Irish importers and exporters using ROI – GB routes as a means of accessing southern UK markets, and the relocation of some large retail warehouses from central UK to mainland Europe.
In the two years that have now passed since the new Brexit arrangements came into effect, this shift has remained remarkably consistent. From the early months of 2021, ROI – EU traffic has consistently represented one in every three RoRo units in Irish ports, with little deviation throughout. Similarly, traffic on ROI – GB routes has consistently been 20% below its 2019 benchmark, with little sign of a swift return to those volumes. RoRo traffic on both GB and EU routes fell by 3% in Q4 2022, a reflection of the global economic environment, rather than any shift in post-Brexit market composition.
In all, surpassing 1.2 million units is an important milestone for the RoRo sector, as it would likely have been achieved before 2022 had the negative effects of the first wave of COVID-19 in 2020, or the Brexit stockpiling effects in early 2021, not occurred. 2022 therefore represents a return to the momentum built up in the rapid period of growth in Irish maritime traffic recorded between 2014 and 2019. In addition, it once again highlights the resilience of this sector of the Irish economy to exhibit a reliability throughout difficult economic periods.
In the fourth quarter of 2022, LoLo traffic at Irish ports declined by 8% on an annual basis. This equates to a loss of 22,501 TEU’s. At 265,506 TEU’s, this is the lowest quarterly LoLo total for Irish ports since Q2 2020, during the first wave of the COVID-19 pandemic.
Prior to Brexit, LoLo traffic in Ireland peaked in 2019, recording 1.06m TEU’s in that year, and averaging approximately 265,000 TEUs per quarter. In 2021, this average rose to 294,000 TEUs a quarter. In the first three quarters of 2022, further gains were made, as LoLo traffic averaged roughly 297,000 TEUs per quarter. The drivers of these increases in 2021 and 2022 are the same as those that drove a surge in ROI – EU RoRo traffic; a decline in the use of the UK Landbridge and the relocation of some large retail warehouses from central UK to mainland Europe. Approximately 85% of LoLo traffic from Irish ports is to / from ports in Belgium and The Netherlands, particularly large European transport hubs such as Rotterdam or Antwerp. LoLo traffic has therefore been well placed to benefit from increased demand for direct access to such ports.
The decline in Q4 2022 to levels similar to those recorded in 2019 interrupts the post-Brexit momentum built up since the first quarter of 2021. The cause of this decline is most likely due to the inflationary pressures in large global economies with whom Ireland frequently uses LoLo vessels to trade with. In Section 2, Figure 3 illustrates how the level of inflation in 2022 for goods only, a more relevant measure for the unitised trade sector, has outpaced headline inflation for all items, which include services. In addition, Figure 4 shows a steep decline in international freight rates for containerships vessels. This illustrates that the demand for capacity has fallen as inflation has taken hold, and that this is not a phenomenon isolated to the Irish economy.
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