Change of Black Sea container service

Over the recent months, the participants of the container market in the Black Sea region have been intensely discussing possible escape of some global liner operators from the Black Sea market.
 
Such speculations are fairly driven by high costs and low freight component (for instance, from April’12 till April’13 bunker costs lost 13%, while Asia freight rates dropped 45%), as well as the forecasts concerning the development of cargo base, grounded on the analysis of economic and political processes in the states of the Black Sea region. All these motivate liner operators to optimize their Black Sea services.

The concern of the liner operators in the Black Sea region is aggravated with the situation at the EU container market. The situation there is similar to that at the Black Sea when it comes to rates and bunker costs. However, the cost per TEU for cargoes directed to European ports is lower as compared with those for the Black Sea ones, which makes European market more attractive, the more so due to the market volume among other factors. From July 1, 2013, considerable rate increase is expected at Asia-Europe routes. The market is announced to be able to partially accept the increase while the raised rates in the Black Sea market traditionally return to their former level quite soon (three times over the last year). In the context of the above and other factors, the general concern of container lines calling on the Black Sea terminals seems to be reasonable.

Taking into consideration the interest of container market participants to this issue, Informall BG has surveyed a number of liner operators and analyzed eventual changes and optimization processes at Black Sea line services. 

The most interesting processes are under way at such multi-component services as Asia Black Sea Express (CSCL, “K”Line, YML, WHL, PIL, Hanjin and COSCO) and G6 LOOP 9 (Hapag Lloyd, NYK, OOCL, APL, Hyundai, MOL).

ABS

As Informall BG was informed by some participants of Asia Black Sea Express (ABS), the lines had settled on slot redistribution from mid-June 2013. 

Two vessels operated by “K”Line and CSCL were substituted with Xin Qin Huang Dao and YM Success operated by PIL and YML. Thus, the number of CSCL slots decreased while that of PIL and YML increased. “K”Line, in its turn, preserved only one third of its slots and closed Romania service.

As of today ABX slots are distributed as follows: CSCL – 26.06%, YML – 19.23%, PIL – 18.75%, WHL – 12.50%, COSCO – 9.62%, ZIM – 8.08%, Hanjin – 3.00%, “K”Line – 2.77%.

The service currently involves 8 vessels with approximate capacity of 5,200 TEUs each, operated by PIL (2 vessels), CSCL (3 vessels), YML (2 vessels) and WHL (1 vessel).

Te rotation has remained as follows:  Shanghai-Ningbo-Shekou-Singapore-Port Kelang-Piraeus-Istanbul-Constanta-Ilyichevsk-Port Kelang-Shanghai.

G6 LOOP 9

As for another direct Black Sea service, participants of G6 (Hapag Lloyd, NYK, OOCL, APL, Hyundai, MOL) deny rumours about the leaving of certain operators. At least, participants of former Grand Alliance (Hapag Lloyd, NYK and OOCL) announce their intent to retain their service in the Black Sea. However, the possibility of the alliance’s transformation into other agreements on service arrangements seem to be quite realistic. Under that logic, the changes are possible by autumn, when the “high season” of transportation is over. The rotation is also the same, so far: Ningbo-Shangai-Shekou-Hong Kong-Singapore-Port Said-Ashdod-Istanbul-Constanta-Odessa-Istanbul-Ashdod-Port Said-Singapore-Ningbo.

When estimating mid-term prospects of Black Sea service development, we can expect that feeder calls will be revived, though with a larger capacity of such feeders, while the hubs will handle ULCSs for the Black Sea. This strategy is pursued, for example, by MSC which plans to use the Asya Port terminal being built in Turkey as a port for transshipment of cargo for all Black Sea ports. 

The material had been prepared by Informall Business Group.

Informall Business Group is a Ukraine-based international private holding. It invests into trading/production/education assets in the Black Sea, Eastern Mediterranean and Central Asia.