Covenant ships complete Backhaul Cape diversions Ship’s crew

From Mike Wackel (The Loading Star) –

Hapag-Lloyd has confirmed that THE Alliance ships stationed in the Asia-Northern Europe trade lane will no longer make a 3,500 nautical mile detour around the Cape of Good Hope on their return voyage.

“We have to have the ships for the new THEA network on site in good time,” said a spokesman for Hapag-Lloyd The loading star Today.

Announced in December, the new network will launch next month.

Its main feature is the introduction of newly built 23,500 TEU vessels for Asia-Northern Europe trades and upgrading to 14,000-15,000 TEU vessels between Asia and the Mediterranean and on the Transpacific between Asia and the US east coast.

Following the 2M Alliance’s decision this week to suspend its AE1/Shogun loop, despite reduced demand, the spokesperson said, “We are not planning any specific adjustments to the network at this time.”

As a capacity management tool, THEA ships began rerouting the South African coast in November, extending their backhaul voyages by up to two weeks and shifting advertised sailing dates to headhaul, rather than simply canceling voyages.

Additionally, despite approximately 1,000 tons of additional bunker fuel, each diverted Alliance vessel potentially saved approximately $1 million in Suez Canal tolls, resulting in a net saving of approximately $600,000 per return voyage, based on a scrubber-equipped vessel, that hard burns fuel oil for $400 a ton and super slow steaming.

Environmentalists were unhappy with THEA’s capacity management strategy due to the significant additional CO2 emissions from the longer voyages, and northern European exporters were unhappy with the additional transit times and increase in their carbon footprint.

Diverting ships around the cape was not a widespread practice among members of the other alliances.

As revenue falls dramatically due to a toxic mix of falling demand and falling freight rates, shipping companies are forensically examining their costs for potential savings.

While not “planned”, THEA and its alliance partners will need to deploy more capacity on key trade lanes to match supply with demand over the coming weeks and months until expected retailer inventory replenishment translates into new orders later in the year.

In fact, Hapag-Lloyd CEO Rolf Habben Jansen last week alluded to the need for more organized capacity reductions if demand is expected to be weak for an extended period – as we are seeing now. He said: “We are very much in conversation with our partners as I fully understand the concerns we often get from customers.

“It’s better to restructure a service than to stay empty all the time,” he argued.

The loading star is recognized at the highest levels of logistics and supply chain management as one of the finest sources of influential analysis and commentary.

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