Container Lines Flocking to US East Coast

Spot rates from Asia to the US East Coast are now typically 2.1 times higher than to the US West Coast, prompting three new weekly services from Asia to USEC, according to Drewry Supply Chain Advisors.

First up, the CKYHE Alliance started a new Asia-USEC via Panama service with a maiden departure by the 4,211 TEU Ever Delight on March 27 from Ningbo. The mixed-branded service (AWES by Cosco, NUE3 by Evergreen, and AWS by Hanjin and Yang Ming) will use nine ships averaging 4,380 TEU with Evergreen providing five vessels, Hanjin two and one each from Cosco and Yang Ming.
The port rotation of the NUE3 will be Ningbo, Shanghai, Qingdao, Busan, Colon (Panama), Savannah, Charleston, Colon (Panama), Busan, and back to Ningbo.

In May, the G6 Alliance will re-split is SCE/NYE combo that it paired in October last year to counter the slack demand season, says Drewry. The newly independent services are expected to deploy 10 ships of up to 5,000 TEU on the NYE and nine slightly smaller units on the SCE, three of which will be operated by non-G6 carrier Zim.

In the same month, CMA CGM is partnering with Hamburg Sud and UASC on a new Asia-US East Coast-North Europe pendulum service. UASC is only joining the Transatlantic trade.

The as yet unnamed loop service is expected to run with 15 ships (CMA CGM x 9, Hamburg Sud x 5 and UASC x 1) of 4,500 TEU on a rotation of Qingdao, Ningbo, Shanghai, Busan, Cartagena, Savannah, Charleston, Norfolk, New York, Antwerp, Rotterdam, Bremerhaven, Le Havre, Southampton, New York, Norfolk, Charleston, Savannah, Cartagena, and Qingdao.

Between them these three services will add 34 ships to the Asia-USEC trade and increase the headhaul capacity by as much as 580,000 TEU pa, representing approximately 12% of the current slots.

That figure might require some downwards adjustment as the two calls at Colon on the NUE3 suggest that a sizeable portion of the cargo is destined for other markets via transhipment.

Drewry says it will be interesting to see what effect these new services have on rates to the USEC, but the longer it takes the USWC ports to get back to normal there is every chance prices will maintain their premium.

When the USWC backlog is resolved Drewry expects to see most of the diverted cargo return, which in turn will lower USEC rates and once again re-shape the market dynamics.

How much, it’s difficult to say, but if the USEC rate differential is reduced significantly some shippers might prefer to maintain that routing option, especially as more slots become available through greater use of the Suez Canal routing and the wider Panama Canal.

On the flipside, the USEC labour contract is due to expire in September 2018 so a repeat of the recent situation would inevitably swing things back in the USWC favour temporarily, Drewry says.

Source: Drewry Supply Chain Advisors

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