News / CMA CGM pulls another Asia-North Europe sailing as demand weakens further

© Vladimir Serebryanskiy

CMA CGM has advised its customers that it will withdraw a further peak season headhaul Asia-North Europe voyage as demand continues to disappoint on the key tradelane.

In an advisory yesterday, the French carrier said it was voiding the sailing of its 13,892 teu APL Singapura, which was due to depart from Tianjin on 15 August and Shanghai on 24 August, “due to fluctuations between supply and demand” on the route.

The blanking of the APL Singapura is the fifth by the Ocean Alliance during the usually buoyant peak season, and supports anecdotal reports coming into The Loadstar that carriers could be heading for a new crisis, given that demand should now be at its highest point of the year.

In keeping with the weakening demand trend, THE Alliance has also blanked four peak season loops and one of the HMM standalone AEX services has also been withdrawn.

This will bring capacity withdrawn in July and August – two of the traditional three peak demand months – to some 153,000 teu, according to Alphaliner data, representing a 7% cull in weekly capacity since the beginning of July.

However, the consultant said, the temporary capacity blanking actions by the Ocean and THE alliances would be not be sufficient “to address the imbalance of demand and supply” and notes that the other vessel-sharing grouping, the 2M alliance, has so far declined to withdraw any of its Asia-North Europe capacity.

It said: “No service suspensions have been announced so far, unlike in 2018 when the 2M suspended its AE2/Swan service for 12 weeks from September to early December, which helped to stabilise freight rates in the face of slower demand growth.”

Maersk and MSC decided to temporarily suspend their loop last year as “more efficient management” of their capacity, but conflicting comments from the two carriers on the likely reactivation of the service opened up a marketing opportunity for carriers of the rival alliances to capture business.

Indeed, one source at MSC told The Loadstar at the time that he bemoaned the “naivety” of the Danish carrier in suspending the loop for an indefinite period leaving an “open goal for Cosco and others”.

He added that he did not expect that MSC would be “taken down that road again”.

Spot container rates on the route have plunged by a third since the beginning of the year and currently stand at about $670 per teu, worryingly for carriers some 22% below the level of a year ago.

And carriers have failed to introduce higher FAK rates between Asia and North Europe and, unless there is a surprise, last-minute demand boost, more radical capacity action will be required to reverse the rate erosion.