Alphaliners conclusion in contradiction with the World Shipping Council
Despite rising shipper complaints of poor schedule reliability, increased transshipment and longer transits, the Asia Europe trade can only expect more of the same in the year ahead, according to Paris research house Alphaliner.
This view appears to contradict that of the World Shipping Council, which claimed its ocean carrier members were offering ‘better efficiencies, greater port connectivity and higher service levels’.
According to Alphaliner research, in the past 10 years the number of weekly services on the route has fallen from 35 strings to 19, as the average size of the ships deployed has more than doubled in size, from 7,200 TEU to 15,800 TEU.
Maersk and MSC will extend duration for two out of six loops
From the end of this month, the three alliances will carry out major network changes as they slow their ships further to allow for the introduction of more newbuild ULCVs, as well as to mitigate the higher cost of fuel under the forthcoming IMO 2020 regulations.
Alphaliner said that, due to the wider use of slow-steaming and the extended time necessary in ports to facilitate increased container exchanges per call, the average round trip for a vessel on the service had grown from 8.7 weeks to an astonishing high of 11.3 weeks.
Maersk and MSC will start to extend the duration of two of their six loops this month, the AE5/Albatross and the AE10/Silk services, to 91 days, or 13 weeks, the longest on the tradelane, which Alphaliner notes includes planned diversions for taking bunkers at the Russian Baltic port of Kaliningrad, adding over four days.
the Ocean Alliance only one not considering slow steaming?
When the respective carriers announced their network changes in December, Maersk said its decision would mean ‘slightly prolonged transit times’, but it was deemed necessary ‘to meet our customers’ increasing need for reliable cargo delivery’.
MSC, however, said there was a requirement for ‘longer time buffers in the schedule’ and, attributing the blame for previous schedule unreliability firmly on congestion at ports, added: ‘We can only assume that container terminal congestion at the main ports will continue to worsen.’
Alphaliner noted that both THE Alliance, on its FE5 loop, and the standalone HMM AEX services will also see extended transit times.
However, the Ocean Alliance appears to be bucking this trend.
Difference between supply and demand likely to depress rate levels
Not only is the VSA grouping of CMA CGM (including APL), Cosco (including OOCL) and Evergreen adding a seventh NEU7 loop from April, but its NEU3 string will be cut from 11 to 10 weeks, as part of its network reshuffle.
Altogether, the Ocean Alliance upgrades will see Asia-North Europe capacity up 22 per cent, Alphaliner said, adding that THE Alliance will see a 5 per cent increase in capacity, while the 2M will shrink its capacity offering by 5 per cent, ‘due to the deployment of smaller vessels on three of its existing loops’.
The overall impact on supply and demand is likely to further depress rate levels that have recently weakened, Alphaliner said.
Further capacity expansion due for April
‘Spot freight rates on the Asia-North Europe route have fallen by 28 per cent since the start of the year, erasing the rate gains that carriers obtained in January.
‘The planned addition of capacity on this route in April could put freight rates under further pressure, with capacity utilisation on the Asia-Europe route failing to recover from the dip in February following the Chinese New Year holiday.’