Asia-US spot rates spiked by rush to fill ships to beat trade war tariffs
The Asia to the US east coast component of the Shanghai Containerised Freight Index (SCFI) ...
The 2M alliance has confirmed that it will reintroduce its AE2/Swan Asia-North Europe loop in the second week of December.
The move will put back about 6% of capacity to a tradelane where forward booking prospects are uncertain.
Drewry today described the decision as a “pivotal moment” in the Asia to Europe calendar.
“A big drop in spot rates now would weaken carriers’ hands and make it far harder to secure improvement over the previous terms,” cautioned Drewry.
Maersk Line and MSC “temporarily suspended” the AE2/Swan service at the end of September to mitigate the impact of sluggish demand following the Chinese Golden Week holiday in early October.
At the time of the withdrawal of the 11 18,300-20,600 teu vessels deployed on the service, Maersk Line’s chief operating officer, Soren Toft said: “We believe that by implementing a structural solution in line with lower seasonal market demand, we are supporting our customers’ supply chain needs better than the alternative of irregular and ad-hoc sailing cancellations.”
Maersk advised customers the AE2 would “resume in line with demand pickup”, which it said it expected to be before Chinese New Year in February, while MSC told its customers its Swan service could be resumed “towards the end of the year”.
The 2M’s decision to pull an entire loop with no definitive resumption date, rather than follow the strategy of the other two alliances in blanking voyages in October, was seen as a responsible action by analysts.
However, in doing so, the 2M carriers have reportedly conceded market share to rival alliance carriers during the suspension.
The judicious approach by Maersk and MSC to an anticipated decline in demand was in contrast with the Ocean Alliance, which ramped up its capacity offering on the route. Evergreen, CMA CGM and Cosco had all taken delivery of new ultra-large 20,000 teu-plus vessels for immediate deployment.
The withdrawal of the AE2/Swan loop and the blanking of eight other sailings during October, did little to stem the slide in spot rates.
Container spot rates from Asia to North Europe tumbled from about $1,000 per teu at the end of August to just $750 per teu last week, and the 2M’s decision to bring back one of its biggest loops can only add to the downward pressure on rates.
“I think MSC pushed Maersk into bringing the loop back early,” one carrier source told The Loadstar today. “The big demand is just not there at the moment,” he said.
“We risk a rates bloodbath just at the wrong time, when we start sitting down with customers to talk contract renewals,” added the source.
If spot rates between Asia and North Europe do go into freefall, carriers will no doubt resort to blanking more sailings. Indeed, according to Drewry, there were 62 cancelled voyages in the first 10 months of this year.
“Much will depend on how strong demand is over the coming months as to how deep carriers go with further void sailings,” said Drewry.
The consultant added however that history suggested that the cuts would not be harsh enough: “in which case, spot rates will continue to be under pressure”.