Analyst predicts disastrous 2012 for crisis-hit container lines
The rates war that has shattered the Asia-Europe trades this year looks set to worsen in 2012, analyst Alphaliner has predicted in its latest report.
Far from restoring some stability to one of the world’s major shipping routes, the recent round of service restructuring could intensify competition between the major players, warns the analyst.
“These developments forbode that the unrelenting rate war on the Asia-Europe trade is set to continue and could spell disaster for carriers in 2012,” Alphaliner said.
The dire prediction follows some major realignments over the past month as lines respond to Maersk’s challenge to offer shippers daily departures from key Asian ports to northerrn Europe.
First came the vessel sharing and slot exchange agreement between MSC and CMA CGM that will allow the two lines to deploy the biggest and most cost-efficient ships available in their respective fleets in each of their four joint Asia-northern Europe loops.
That was followed last week by the announcement that the three members of the Grand Alliance are to co-operate with their opposite numbers in the New World Alliance in a six line super consortium, the G6. Then this week, Evergreen revealed plans to collaborate more closely with the CKYH alliance.
These moves will prompt the remaining carriers in the Asia-Europe trades to look for further collaborative opportunities, said Alphaliner, “although it will not serve as a prelude to any capacity reduction”.
Both MSC and CMA CGM, plus the G6 lines, have stressed that their respective alliances are not designed to reduce ship supply, but rather to maximise economies of scale.
Indeed, Alphaliner reckons that competition in the Asia-Europe trades will become even fiercer next year, as carriers continue to reshape their networks and alliance relationships, while more tonnage is also in the pipeline.
The grim prediction follows a terrible year for lines operating in this market, with spot westbound freight rates down to around $500 per teu from more than $1,400 at the start of the year. Volumes have continued to increase, albeit at a modest pace of around 4,5%, but capacity has expanded faster as newbuildings are delivered from shipyards.
With lines intent in preserving market share, attempts to lift freight rates have proved futile. Peak season surcharges that a number of lines tried to apply in anticipation of year-end cargo surges ahead of Chinese new year have been shelved after the expected upturn in bookings failed to happen, Alphaliner notes.
Furthermore, with a weaker outlook for Chinese exports next year, any rate gains are likely to be short-lived, the analyst predicts.
“The much-hoped for rationalisation of Asia-Europe services is not bound to materialise, as the consolidation of services under the new partnerships fails to remove any excess capacity,” Alphaliner said.
Furthermore, new tonnage will continue to be delivered from shipyards, with the G6 alliance due to phase in 18 newbuildings of between 10,000teu and 13,000teu in 2012, while MSC and CMA CGM will receive 20 new vessels of between 13,000 eu and 16,000teu.
Alphaliner estimates that Maersk will still have the largest share of the Asia-north Europe trades in the latter half of 2012, albeit down slightly from 27% at the moment to 23%. The G6 alliance will stay the same with a trade share of 23%, with MSC-CMA CGM slipping back a little from 23% to 21%, while the CKYH alliance will lift its share from 14% to 16%.
Alphaliner anticipates that further synergies will occur, with Cosco and China Shipping expected to work more closely together through extensive cross-alliance slot arrangements.
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