Weekly capacity on the Asia-North Europe trade, the subject of a series of service withdrawals in recent months, is creeping back up, according to latest figures released by container shipping analysts PR News Service.
Capacity will rise by eight percent by the beginning of June, compared with three months earlier, said the analyst. Weekly capacity on the Asia-North Europe trade will be just short of 244,000 TEUs, compared with 225,600 TEUs back in March when lines grappled with adjusting the supply factor to match market demand.
But there are many interesting conduits to this latest analysis, particularly highlighted by an extensive series of rate increases, which seem to be sticking, and an extensive portfolio of alliance changes that have opened up a whole new trade potential for the lines.
First off, there have been new ship deliveries for vessels in the 13,000+ TEU capacity category, with Mediterranean Shipping Co, UASC, Cosco and China Shipping topping the league on that count.
However, as shipping line executives have pointed out, this influx of larger capacity has only seen an increase of around 4,000/5,000 TEUs per service concerned on the trade, because the newbuildings replace vessels around 8,000/9,000 TEU capacity.
What is apparent is that the latest set-up of new alliance structures, combining the big names in the East-West trades, has greater potential than just a combination of lines trying to make it work from a financial standpoint.
As an example, the Asia-Europe CKYH Alliance/Evergreen agreement combines five major Asia names, Cosco, “K’’ Line, Yang Ming, Hanjin and Evergreen under a loosely termed co-operation deal.
Hanjin has its own container terminal in Algeciras, and the terminal is perfectly positioned to handle the North-South trades, particularly over Africa. Hanjin is an existing vessel provider on the West Africa Service (WAF) with UASC covering North Europe-West Africa.
Evergreen until now, does not have a Europe-West Africa service, but thanks to the Asia-North Europe co-operation with the CKYH lines, will do in June, courtesy of the Hanjin-tonnaged NE6 service, presently being upgraded with 13,000 TEU vessels to replace those around 9,000 TEUs. The Hanjin NE6 service calls both westbound and eastbound at Algeciras, and obviously the increased capacity can help Evergreen cater for the North-South demand.
But separately, lines like Evergreen, Zim and China Shipping are also bringing back slack season suspended services. From the third week of May, they will re-launch their jointly-operated CES2/AEX2 service with the first westbound sailing scheduled from Qingdao on May 18. The service was dropped back in November 2011 to adjust capacity to meet the Asia-North Europe market downturn during the slack season.
As part of the CKYH/Evergreen co-operation agreement, Cosco, “K’’ Line, Yang Ming and Hanjin are expected to have slots on the CES2/AEX2 service from May onwards. Nine vessels are to be deployed, with average weekly capacity at around 8,700 TEUs.
Separately, there is the GRI issue announced by lines in the first quarter and the question is whether they have actually been met by clients.
According to most lines, during March, the achievement level on the GRIs announced was around 90 percent. By April, that level will have dropped to around 65 percent.
With capacity on the Asia-North Europe trade rising eight percent by June, this downward pressure on freight rates is set to continue well into the third quarter.
Capacity will rise by eight percent by the beginning of June, compared with three months earlier, said the analyst. Weekly capacity on the Asia-North Europe trade will be just short of 244,000 TEUs, compared with 225,600 TEUs back in March when lines grappled with adjusting the supply factor to match market demand.
But there are many interesting conduits to this latest analysis, particularly highlighted by an extensive series of rate increases, which seem to be sticking, and an extensive portfolio of alliance changes that have opened up a whole new trade potential for the lines.
First off, there have been new ship deliveries for vessels in the 13,000+ TEU capacity category, with Mediterranean Shipping Co, UASC, Cosco and China Shipping topping the league on that count.
However, as shipping line executives have pointed out, this influx of larger capacity has only seen an increase of around 4,000/5,000 TEUs per service concerned on the trade, because the newbuildings replace vessels around 8,000/9,000 TEU capacity.
What is apparent is that the latest set-up of new alliance structures, combining the big names in the East-West trades, has greater potential than just a combination of lines trying to make it work from a financial standpoint.
As an example, the Asia-Europe CKYH Alliance/Evergreen agreement combines five major Asia names, Cosco, “K’’ Line, Yang Ming, Hanjin and Evergreen under a loosely termed co-operation deal.
Hanjin has its own container terminal in Algeciras, and the terminal is perfectly positioned to handle the North-South trades, particularly over Africa. Hanjin is an existing vessel provider on the West Africa Service (WAF) with UASC covering North Europe-West Africa.
Evergreen until now, does not have a Europe-West Africa service, but thanks to the Asia-North Europe co-operation with the CKYH lines, will do in June, courtesy of the Hanjin-tonnaged NE6 service, presently being upgraded with 13,000 TEU vessels to replace those around 9,000 TEUs. The Hanjin NE6 service calls both westbound and eastbound at Algeciras, and obviously the increased capacity can help Evergreen cater for the North-South demand.
But separately, lines like Evergreen, Zim and China Shipping are also bringing back slack season suspended services. From the third week of May, they will re-launch their jointly-operated CES2/AEX2 service with the first westbound sailing scheduled from Qingdao on May 18. The service was dropped back in November 2011 to adjust capacity to meet the Asia-North Europe market downturn during the slack season.
As part of the CKYH/Evergreen co-operation agreement, Cosco, “K’’ Line, Yang Ming and Hanjin are expected to have slots on the CES2/AEX2 service from May onwards. Nine vessels are to be deployed, with average weekly capacity at around 8,700 TEUs.
Separately, there is the GRI issue announced by lines in the first quarter and the question is whether they have actually been met by clients.
According to most lines, during March, the achievement level on the GRIs announced was around 90 percent. By April, that level will have dropped to around 65 percent.
With capacity on the Asia-North Europe trade rising eight percent by June, this downward pressure on freight rates is set to continue well into the third quarter.