Slack season kicks in for lines



Capacity is being cut drastically on the Asia-Europe routes as the slack season starts. Several strings or loops on the Asia-Europe and Asia-Mediterranean routes have been discontinued while big shipping groups such as CKYH and the Grand Alliance are pulling out individual services to suit market demand.
Capacity levels on the transpacific is also being cut but only marginally. On the Asia-US West Coast and Asia-US East Coast routes, the tendency has increasingly focussed on suspension of individual sailings.
Capacity deployed on the Asia-North Europe trade in December 2009 is more than 16 percent down against the same period last year, but this figure is dwarfed by the nearly 23 percent cutback on the Asia-Mediterranean trade over the same time frame.
These moves have effectively taken out around 7,000 TEUs of weekly capacity from the North Europe trade and 5,000 TEUs from the Mediterranean trade.

The CKYH initiative kicked off in October, but it took almost six weeks before the Grand Alliance lines, Hapag-Lloyd, NYK and OOCL, made known their intentions of cutting capacity.
The capacity cutback is a little easier for the Grand Alliance because member line MISC will leave the group at the end of this month. The Grand Alliance will cut back its loops from four to three on the Asia-Europe trade from the end of December, taking out some 6,000 TEUs of weekly capacity.
The Grand Alliance will also provide a whole new service set-up with one line deploying its own vessels on one loop - a move that gives an operational plus point to the individual service structure as it improves scheduling integrity. It also provides more space for customers shipping with a certain line within an alliance - an important factor that has emerged in the slack season downturn Maersk and CMA CGM have so far not declared any intentions of cutting back individual services, but have dropped several sailings on both the North Europe and Mediterranean routes.

Much of the capacity cutbacks for the Asia-US East Coast trade will come through the merger of a Grand Alliance and New World Alliance service, making for a 4,800 TEU weekly capacity drop, and a series of cancellations of sailings by the CKYH Alliance.
The CKYH Alliance has already confirmed a 20 percent capacity cutback on the US East Coast trade. "K'' Line and Yang Ming will cut sailings on the CKYH's five services but the thinking at Cosco and Hanjin is different. They will make a concerted effort to downsize capacity through the slack season.
Last slack season, the CKYH lines took out one string for three to four months - the AWE5 service, which withdrew around 4,200 TEUs of capacity. This time around, the service is staying intact.
UASC has slots on this service and the CKYH AWE1 service, but is suspending involvement in the US East Coast trade on these two services, and will now only cover the trade via the MINA service through the Suez route.
The Grand Alliance and New World Alliance will merge their South China Express (SCE) and New York Express (NYX) services taking out around 4,000 TEUs of capacity.

Other lines, such as Mediterranean Shipping Co (MSC) and CMA CGM, addressed the slack season demand well before it kicked in and so have picked up additional cargo. MSC and CMA CGM have juggled their Golden Gate and PEX2 and PEX3 services.
MSC rejigged its Golden Gate service so it became a Suez transit loop rather than going through the Panama Canal. This gave MSC the added clout of picking up cargo in the Middle East-Red Sea market through calls at Jeddah eastbound and Salalah westbound.
As the Panama Canal cannot take vessels of more than 5,000 TEUs, MSC now operates a Suez service with a mix of vessels of up to 6,700 TEU capacity.

CMA CGM has followed the same route with its PEX3 and this now heads back to Asia via the Suez, picking up on the Mediterranean and Middle East markets.
On the US West Coast route, the capacity downturn is not so obvious, and what is being taken out is not much different from last year's slack season. The New World Alliance recently withdrew its PS-5.

-Cargo News Asia