Carriers add 9,000teu to Asia-Europe


Leading container industry analysts have warned that a new service on the Asia-Europe trade lane will exert even greater downward pressures on container freight rates. They were responding to news from industry analyst Alphaliner that Evergreen and China Shipping Container Lines (CSCL) will end their joint Asia-Europe offering (CEM/AEX1) at the end of July. CSCL will continue to operate the AEX1 service and will replace Evergreen’s contribution with one idle ship and another currently sailing on the Asia-Middle-east route Evergreen’s CEM service will be joined in August by Hanjin with two ships, which will bring the overall string to nine (but possibly ten) 8,000-10,000teu vessels. Market observers say this will result in additional Asia-Europe capacity of about 9,000teu per week. The container shipping industry lost billions of dollars in 2011 due to an oversupply of capacity. Maersk Line lost almost $600 million in Q1 2012 alone and has tried to remedy the supply-demand imbalance by cutting its capacity by 9%, mainly through slow-steaming. In overall terms, much of that reduction could be offset by a new service on the route, exerting further downward pressure on prices. Neither Evergreen or CSCL responded to requests for information from Lloyd’s Loading List.com, but quizzed on the prospect of the capacity increase, Lars Jensen of SeaIntel Maritime Analysis, said: "The market will basically be back to the same amount of capacity, perhaps slightly more, as that seen in the peak season last year, and we all know what happened to rates as a result of the lack of balance between supply and demand." His comments were echoed by Martin Dixon at Drewry, who said: "Given stagnant growth on the headhaul trade between Asia and Europe, the addition of new capacity will weigh on already weakening freight rate levels." Jensen went on to highlight the poor market conditions facing container shipping on the Asia-Europe trade in the months ahead. "European economies are not showing anything that points to a strong peak season in 2012. Nor are there are any signs that the second quarter of 2012 will be any better than the first which was flat. “The outlook later in the year is not very encouraging either. An OECD economic report concludes that there is likely to be a slight reduction in stocks and inventory in the third quarter of the year.” The World Container Index’s Shanghai-Rotterdam container freight rate on 24 May was down 4.5% on the previous week to US$3,401 per feu – the third successive weekly fall after dips of 4% on 17 May and 4.4% on 10 May. The WCI’s backhaul Rotterdam-Shanghai benchmark also slipped slightly yesterday to $877 per feu, while the Shanghai Containerised Freight Index fell a further $17 to $1,409.


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