News / Carriers set course for new shores in search of profitable growth

Port Elizabeth © Wirestock Dreamstime.com

Ocean carriers are refocusing their strategies away from the traditional, but oversupplied, east-west routes, seeking growth in north-south trades – although the burgeoning Indian export market is an outlier.

According to a survey by Alphaliner, African trades recorded the highest year-on-year growth, as at 1 November, in percentage terms, with a 21.1% increase in capacity deployed.

The consultant said the fleet deployed on Africa-related services was 354,000 teu higher than the previous year.

“Further growth is guaranteed, as Maersk and CMA CGM are shifting 13 neo-panamax vessels of 13,100 to 13,900 teu to a joint Far East-West Africa service,” said Alphaliner, adding that the new loop replaced services operated by ships of between 4,250 and 7,100 teu.

Meanwhile, Latin American trades recorded 17.5% growth during the 12-month period, with capacity deployed on services increasing by 562,000 teu.

“The capacity deployed in Latin America-related services has grown consistently in the past few years,” said Alphaliner.

Indeed, the potential for growth in Latin America has seen Israeli carrier Zim expand its network coverage with the launch of two new services, the Zim Albatross (ZAT) loop, connecting China and South Korea with the South American west coast, and the Zim Gulf Toucan (ZGT), between the east coast of South America and the US.

Alphaliner recorded negative capacity growth on Asia to North America routes, which were down 4.5% year on year. It said that “almost 243,000 teu slots have been removed from the Asia-North America trades since November 2022”.

And a further reduction is expected, “as the members of THE Alliance have just temporarily closed the Asia-US east coast EC4 loop in which 12 neo-panamax ships of 13,500 to 14,200 teu are deployed,” said Alphaliner.

Elsewhere, in a disconnect with the reduced demand and a non-existent peak season, the troubled Asia-Europe tradelane saw 7.4% capacity growth during the period. According to Alphaliner data, 394,000 additional teu slots were added to services during the year to 1 November, which it attributed to the phasing-in of a number of newbuild 24,000 teu ships displacing smaller capacity tonnage.

However, rumours abound in the market that carriers are about to take drastic action in their rate restoration endeavours and suspend a number of services on the route in a final attempt to lift freight rates above their current sub-economic levels.

Thereafter, what carriers will do about the continued significant imbalance between supply and demand remains to be seen, but it could involve redeploying some remaining smaller tonnage onto African or Latin American services.

Another option would be to plug into the growth potential of trades ex- and to India. According to statistics published by the World Trade Organisation, the growth rate for Indian exports last year was an impressive 15%, compared with the previous year, at some $453bn.

And this has persuaded Japanese carrier ONE to announce a standalone service for next year between India and the US east coast.

ONE said it would deploy a fleet of nine, as yet un-nominated, vessels on the new service, dubbed WIN, to cater for the increased demand for exports of consumer goods, such as electronics and apparel.