Soft demand and falling rates push 2M to blank another Asia-USEC sailing

Date: Wednesday, March 20, 2019
Source: The Load Star

2M partners Maersk Line and MSC have announced plans to blank sailings between Asia and the US east coast, as carriers attempt to curtail an increasingly steep spot rate slide through restricting capacity.

A statement from MSC indicated the trade was still suffering from a post-Chinese New Year demand slump.

“MSC would like to inform customers about an additional blank sailing during week 14 to rationalise capacity supply from Asia to the US east coast.

“A contingency plan will be in place allowing you to continue to place your bookings with limited disruption to your cargo flow with alternatives services,” it said.

As a result, the scheduled departure of the 10,000 teu Zim Djibouti from Tianjin Xingang on 4 April will be blanked. The vessel operates on the 2M’s TP10/Amberjack service, which Maersk and MSC have operated with Israeli carrier Zim since September.

The service has a port rotation of Tianjin Xingang-Qingdao-Ningbo-Shanghai-Busan-Kingston-Savannah-Charleston-Jacksonville-Wilmingtonn and then returns to Asia.

The vessel is currently westbound on the pacific heading for the Russian bunkering hub of Vladivostok and is now due to arrive on 4 April.

In a commentary last week, industry analyst Alphaliner said carrier efforts to maintain rate levels on service to both the US east coast and since west coast since the turn of the year had so far proved fruitless.

“Despite a record number of void sailings in February and March, and despite the fact that no new services will be launched in April this year, spot freight rates on the transpacific routes have continued to fall.

“Far East-USWC rates are now 45% lower than their November peaks, while Far East-USEC rates have dropped 34% over the same period, according to last week’s SCFI assessment,” it said.

And the end of last week saw rates decline even further, with the SCFI’s Asia-US east coast index dropping 5% week-on-week to finish at $2,357 per 40ft.

The importance of maintaining rate levels has never been higher for carriers, which have now begun annual contract negotiations with major shippers and are generally signed in May.

With capacity tightening widespread, and the IMO’s new low sulphur regulations looming, shippers were warned at the recent Transpacific Maritime conference in Long Beach to expect double-digit rate increases this year.

Philip Damas, head of Drewry Supply Chain Advisors, told delegates: “We are seeing the strongest sign of rate discipline since 2010 and the objective of BCOs is to minimise the cost increases because the market has shifted.”

Forwarders that The Loadstar spoke to on the sidelines of the conference agreed in this assessment.

At the beginning of March, the Ocean Alliance announced three of blanked Asia-US east coast sailings, and according to member OOCL, this will comprise one sailing cancelled on each of its East Coast China 2, East Coast Express 1 and East Coast Express 2 services from now to mid-April.

Alphaliner also noted that plans to launch a new Asia-US east coast service from South Korean carrier SM Lines were “hold for this year, with no capacity expansion announced so far”.

 

Read from the original source.

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