COSCON Cuts AAC Service Due to Weak Transpacific Demand

Image Courtesy: China Cosco Holdings

Shanghai-based shipping company COSCO Container Lines Co. Ltd. (COSCON) has suspended the America – Asia Container (AAC) service, a high capacity Asia – US West Coast service operated with 8,500-10,000 TEU ships, according to data provided by Alphaliner.

The loop’s final eastbound vessel set sail from China’s Lianyungang on June 8.

The AAC service covered the outbound traffic from Lianyungang, Shanghai and Ningbo, while the inbound traffic was related to Oakland and Los Angeles, according to data from the company.

Capacity reductions from the withdrawal are expected to be compensated in part by the upsizing of COSCO’s Asia – US Southwest Coast (CEN) service from the 8,500 TEU scale to 13,000 TEU.

The AAC suspension is the latest initiative taken to stem overcapacity on the transpacific route, as sluggish demand and low freight rates are forcing carriers to take unprecedented steps to slash capacity, just as the traditional peak shipping season begins, Alphaliner said.

Operated by COSCON, other carriers taking slots in the AAC service are the French CMA CGM, Dubai’s United Arab Shipping Company (UASC), German-based Hamburg Süd and Singapore-based container line Pacific International Lines (PIL), under the terms of five separate arrangements.

It is the largest service to be withdrawn, and the move will be followed later this month by the suspension of the CC1 service by G6 and the Manhattan Bridge/AAE 3/AUC 2/ASUS by O3/Hamburg Süd.

Carriers appear to have over-estimated the demand growth for transpacific cargo and they are now forced to belatedly scale-back capacity provision. Total capacity removed will reach 16,000 TEU per week, resulting in a –1% year-onyear reduction in overall transpacific capacity.

Contrary to Far East – USWC capacity which is reduced by –3%, Far East – USEC capacity will still increase by 4%.

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