News / MSC joins lines cutting transpac services – but it's not enough to halt rate slide

Photo: © Sheila Fitzgerald

MSC has become the first major container line to withdraw transpacific capacity, as rates to the US West Coast drop below $2,000 per feu.

The Swiss-Italian market leader has suspended its Pearl service that connects Cai Mep, Hai Phong, Nansha, Hong Kong, Yantian and Xiamen with Long Beach.

Three ships, ranging from 8,000-9,400 teu, were deployed, and the last sailing, according to consultancy Linerlytica, will be made by MSC Elodie on 13 July. However, the Far East-India leg of the service would be retained.

On Friday, the Shanghai Containerised Freight Index showed the Shanghai-US West Coast rate dropped 19% from the previous week, to $2,089 per feu. However, Linerlytica said spot rates were now less than $2,000 per feu.

The Shanghai-US East Coast rate declined by 13%, to $4,124 per feu.

Hong Kong-based TS Lines is understood to have removed the AWC2 service it reintroduced in late May, calling at Xiamen, Nansha, Shekou, Yantian and Los Angeles. And Linerlytica implied that SeaLead Shipping has called off plans for a third transpacific service, and redirected the three 2,300-3,400 teu ships to a revived China-Red Sea service.

This move mirrors one by China United Lines. The Chinese state-controlled carrier pulled its transpac west coast service linking Nansha, Shekou, Ningbo, and Qingdao with Los Angeles, after just one sailing. The ships assigned, CUL Manila and CUL Jakarta, have been diverted to its Red Sea service.

However, these service withdrawals are not enough to reverse the downward trend in rates. With 23 operators on transpacific routes, the market remains saturated.

Linerlytica added that as President Trump finalised tariffs on imports from Asia, US importers would hold back on shipments, putting more pressure on freight rates, and added: “Further capacity cuts are required in the next four weeks, with the removal of some 30,000 teu a week needed.”