Apparel shippers could be hit by Maersk Line decision to cut India-Europe service

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Maersk Line has announced that it is to discontinue its ME5 Indian subcontinent-Mediterranean link – a capacity reduction of around 16% of its services between the Middle East-Indian subcontinent and Europe.

It said it would add new port calls on its ME1, ME2 and ME3 services and launch a feeder shuttle service linking Chennai, Colombo and Salalah to compensate for the termination next month.

The current schedule of the ME5 loop – only launched this February replacing the MECL2 service which had also included US east coast calls – is: Chennai, Colombo, Salalah, Djibouti, Jeddah, Aqaba, Port Said, Genoa, Valencia and Algeciras, deploying seven vessels of around 4,600 teu turning in seven weeks.

Maersk did not elaborate on the revised schedules for the remaining ME services.

The culling of the ME5, which is operated outside the 2M alliance agreement, will follow the termination this month of the 2M AE9/Condor loop between Asia and North Europe, which will become an inducement-only link.

It is a surprising change of strategy by the Danish carrier, not least because the high profile launch of the ME5 – attended by Jordan’s minister of transport and other VIPs – put the Jordanian port of Aqaba at the centre of the trade between India and the Mediterranean.

It suggests Maersk is putting its entire liner network under the microscope as global freight rates worsen due to pockets of slack demand exacerbated by overcapacity.

The move is likely to be a blow for many of the world’s largest clothing retailers which rely on feeder links to Colombo from the apparel production hub of Bangladesh. They will be disappointed to see a deepsea service to Europe withdraw from the Sri Lankan port.

One retailer told The Loadstar last week it had had to build an extra week in its container supply chain to Europe because feeder connections from the Bangladeshi port of Chittagong to Colombo frequently missed their mainline connections.

“The only other option is using feeders to Singapore, Klang or Tanjung Pelepas, but that is sending the cargo the in wrong direction. Either way you have to build in another week and it is causing issues,” he said.

Meanwhile, over 50% of India’s container cargo is transhipped at ports outside the country, such as Colombo, Singapore, Salalah and Jebel Ali, due to the fact that few of its own ports can accommodate the biggest containerships that now ply the deepsea routes.

The lack of direct calls and the hit and miss risk of transhipment services is a major concern for shippers trading with the Indian subcontinent.

However, while other BRIC economies are stumbling India’s GDP growth rate has been an impressive 7%, upstaging China in the second quarter of this year.

“India is ready to take the baton of global growth,” said deputy finance minister Jayant Sinha recently, referring to the downturn in China.

But a lack of direct access to ports and the infrastructure problems are holding the country back from becoming the “new engine room” of global growth and moves to bring down trade barriers and reduce bureaucracy are taking time.