Alphaliner: 2M Suspension of Asia-Europe String Too Late

The 2M carriers, Danish Maersk and Switzerland-based MSC, have decided to suspend regular sailings of their Asia to North Europe string ‘AE-9/Condor’ from September amid collapsing freight rates spurred by lower demand on the trade this year.

Total demand on the headhaul trade dropped by 3.5 % during the first half of 2015, while average capacity increased by 3.4 % in the same period.

Last week, rates for twenty-foot equivalent units from Asia to Europe stood at a loss making level equaling to USD 640, according to the Shanghai Containerized Freight Index.

However, according to market analyst Alphaliner, the decision on suspension comes too late to reverse the ongoing rate slide on the trade.

“Alphaliner already highlighted the need for each of the four alliances to remove one Far East to North Europe string in June, in order to balance trade capacity with the lower demand,” Alphaliner said.

The ‘Ocean Three’ carriers eventually made the first move and announced the cancellation of 12 consecutive weekly sailings starting from the end of June. Not much later, this was partly matched by the G6 and CKYHE alliances, with selected void sailings.

As World Maritime News reported yesterday, G6 carriers voided additional four sailings within their Asia-Europe product in response to drop in market demand.

“The 2M carriers however, remained steadfast in not withdrawing any capacity throughout the months of July and August. The shipping lines’ failure to remove surplus capacity has effectively doomed the last two General Rate Increases (GRIs), announced on 1 July and 1 August, respectively,” Alphaliner added.

The industry analyst believes that although carriers will attempt another rates hike on 1 September, any success would likely be short-lived as demand is expected to fall sharply in October, when China’s week-long National Day ‘Golden Week’ holidays will mark the end of the summer peak season.

Danish liner giant Maersk Line has already revealed plans to hike spot freight rates by USD 1,000 on main routes from ports in Asia to ports in northern Europe from September 1.

The move was soon backed by Mediterranean Shipping Company and French CMA CGM, which have announced rate hikes of USD 1,000 and USD 950 respectively, along with Evergreen, Orient Overseas Container Line and Japanese K Line, Reuters reports.

World Maritime News Staff

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