2M increases capacity to reduce speed on Asia-Europe network Ship’s crew

From Mike Wackett (The Loadstar) –

Next month, 2M partners MSC and Maersk will deploy nine additional ships on their Asia-Europe services. This is a capacity expansion at a time of weak demand that could spark a bitter cargo war on the trade route.

Asia-to-Northern Europe and Asia-to-Mediterranean container spot rates have been stable since mid-March after falling from record highs. For example, this week’s Freightos Baltic Index (FBX) remained flat at $1,379 and $2,441 per 40 feet and $2,441 per 40 feet, respectively.

Beginning in the first week of June, the 2M will add one ship each to the AE5/Albatross, AE10/Silk, AE7/Condor, AE55/Griffin, AE11/Jade, AE12/Phoenix and AE15/Tiger loops, as well as two more trips to the AE6/Lion Service.

“The additional vessels will allow us to reduce speeds, giving us the buffer we need to meet schedule challenges, improve reliability and reduce the risk of missed trips.” said Maersk.

It said slow-steaming would add an average of six days to round-trip trips between Asia and northern Europe and five days on average to Asia-Mediterranean connections. However, the resulting reduction in emissions would “help us meet UN IMO’s Carbon Intensity Indicator (CII) requirements,” she added.

However, the impact on a ship’s CII performance is undecided. Shipbrokers and shipping services company Clarksons recently suggested the impact may be “grossly overestimated”.

Meanwhile, in the Trans-Pacific, the steady erosion of mid-April GRIs continues, with Xeneta’s Asia to US West Coast XSI component down another 3% this week to $1,441 per 40ft, after losing 8% month-to-date.

Prices from Asia to the US East Coast were flat, with Drewry’s average WCI spot price virtually unchanged at $2,831 per 40 feet.

Nevertheless, The Loadstar received unsolicited rates this week from a Chinese carrier offering expedited shipping from Shenzhen, Shanghai and Ningbo to US West Coast ports for US$1,100 per 40 feet, with the East Coast quoted as US$2,300.

This suggests that the transpacific market has not yet bottomed out and some shippers are being encouraged to continue using the spot market for some of their volume.

The airlines serving the route are refusing to sign new long-term contracts that are too similar to spot fares. During Hapag-Lloyd’s first-quarter results conference call this week, CEO Rolf Habben Jansen said the airline would not agree on uneconomic fares.

“Spot rates have fallen to levels that really don’t make sense… We don’t enter into 12-month contracts when we know in advance that we’re going to lose a significant amount of money,” he said.

Elsewhere, in the transatlantic market, the decline in spot rates is accelerating. The FBX component from northern Europe to the US east coast collapsed 17% to $2,235 per 40 feet this week after losing 55% since early March.

(c) Copyright Thomson Reuters 2023.

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