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The 2M’s decision this month to remove 6% of westbound capacity on the Asia-North Europe tradelane will not be enough to push up freight rates, but should “temper the decline”, said Drewry.
Container spot rates on the route have slumped by 18% since the end of August and now sit at some $766 per teu, just ahead of next week’s Chinese Golden Week holiday which traditionally heralds the slack season.
Drewry said 2M partners Maersk Line and MSC had “ridden to the rescue of the market” by temporarily suspending the AE2/Swan service , taking out over 19,000 teu of capacity a week.
According to the consultant, westbound volumes by the end of July had recorded a year-on-year 1% decline, due, it said, to “lacklustre demand” in the key import markets of Germany and the UK.
And this negative growth had been exacerbated by the continued influx of new ultra-large tonnage, resulting in headhaul utilisation levels falling to an average of 84%, compared with 91% a year ago.
The capacity management endeavours of the 2M, Ocean and THE alliances to “prop up utilisation with ad-hoc skipped sailings” would, said Drewry, have been sufficient to arrest the rate slide.
It said for the spot market to “gain traction”, another loop would need to be culled and that the Ocean Alliance, with a 35% market share, was the obvious candidate.
But, it added, it “remains to be seen” whether CMA CGM, Cosco and Evergreen would be “prepared to cede market share for the greater good”.
Indeed, the French carrier has recently announced a discount on its Asia-North Europe FAK from today, suggesting it is prepared to battle to fill its ships.
Meanwhile, reacting to speculation concerning the future employment of the 19,000 teu ULCVs on the AE2/Swan loop, Maersk has confirmed to Drewry that its three vessels will be cascaded into the 2M’s AE1/Shogun string, replacing smaller units of about 17,500 teu, which would then either be idled or sent to drydock for maintenance.
MSC had not responded to Drewry before publication, but there have been rumours circulating that the carrier might take the opportunity of a gap in the employment of the vessels to arrange the installation of exhaust gas cleaning systems (scrubbers), given this is the owner’s declared preferred option to comply with the IMO’s 2020 0.5% sulphur cap regulations.
Elsewhere, HMM, as slot charterer on the 2M Asia-North Europe service, is facing a challenging period during the suspension of a complete loop of a service offering.
The South Korean carrier launched a standalone Asia-North Europe (AEX) weekly service in April using a 5,000 teu panamax vessel. However, in July it decided to discontinue the call at Southampton, due it said to “reliability and schedule integrity” issues.
But last week, The Loadstar was advised by HMM that the direct Southampton call on the AEX service would be reinstated from the middle of next month.
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