ZIM and THE Alliance cut transpacific capacity

ZIM Line and THE Alliance each suspended an Asia-US West Coast service, helping to stabilize transpacific rates, when the Shanghai Containerized Freight Index (SCFI) closed on July 7.

The last trip of the ZIM North Pacific (ZNP) service from Busan will take place on July 12. The service, which accounts for 1% of West Coast capacity between Asia and the US, previously had seven to nine vessels ranging from 2,700 to 4,300 TEU calling at Kaohsiung, Yantian, Ningbo, Shanghai, Busan, Vancouver, Busan and Kaohsiung.

The Israeli shipping company will replace ZNP by buying slots on the Mediterranean Shipping Company’s Chinook service, which calls at Yantian, Shanghai, Qingdao, Busan, Vancouver, Seattle, Portland and Yantian. However, ZIM is excluded from the Seattle and Portland bids. Due to the ongoing dockers’ strikes on Canada’s west coast, the rotation of North American ports will be reversed and Seattle and Portland will be added ahead of Vancouver.

The alliance, consisting of Hapag-Lloyd, ONE, Yang Ming and HMM, will retire its Asia-US West Coast PS5 service from August, eliminating 3% of capacity on the route. The service uses six 8,000 to 9,000 TEU vessels and calls at Shanghai, Ningbo, Los Angeles, Oakland, Tokyo and Shanghai.

THE Alliance will adjust the rotation of three of its FE-USWC services to maintain coverage, adding a new westbound call to Tokyo on PS3 and a Shanghai call on PS6, while the Busan call will be added to the PS6 is replaced by a new Busan call on the PS7.

On July 7th, rates for West Coast Asia-US and East Coast Asia-US were stable at $1,404/FEU and $2,368/FEU, respectively.

Linerlytica noted that ZIM and THE Alliance withdrawals reduced transpacific capacity by 14%.

However, the overall SCFI was still lower as interest rates fell from Asia to Europe, the Persian Gulf and Australia. The Asia-Europe rate closed 3% lower at US$740/TEU, while the Asia-Persian Gulf rate was down 7% to US$1,145/TEU and the Asia-Australia rate was down 4% to US$249 -Dollar/TEU fell.

Linerlytica said: “More aggressive capacity cuts are needed to ensure fare stability as airlines’ resolve to be tested over the next four weeks remains in limbo as their ability to push for fare increases in August is yet to come is on the brink.”

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