The four liner carrier members of the CKYH-Green Alliance said Monday they will cut one of five current loops between Asia and Europe in mid-October.
The reduction in the number of services is a seasonal adjustment in capacity for the winter period, when cargo demand typically dips. The alliance members – COSCO Container Lines, “K” Line, Yang Ming, and Hanjin Shipping – didn’t specify which of their services will be cut, adding “more details will be announced when finalized.”
It’s the first indication that carriers may reduce a sizable amount of capacity on a trade that's still suffering from weak rate levels. The delivery of large vessels built for the Asia-Europe trade is expected to continue through next year and into 2014.
Meanwhile, liner shipping analyst SeaIntel said in its Sunday Spotlight
report that it doesn’t think enough is being done by carriers on the transpacific or Asia-Europe trades.
“Despite talk of blanked sailings following the Chinese Golden Week holiday, the capacity reduction on the Asia-Europe trade is very limited compared to the reductions seen in Golden Week last year,” SeaIntel said. “If carriers were to reduce capacity in the Asia-Europe trade over Golden Week in a fashion similar to 2011 – which certainly was not a strong year – they need to announce pull-back of up to an additional 60,000 to 75,000 TEUs for Golden Week.
“The transpacific trade also needs to see additional capacity pull-back if the reductions during Golden Week are to match the pattern seen in 2011.”
SeaIntel estimates that carriers need to pull up to 20,000 TEUs of capacity on the Asia-U.S. West Coast trade and up to 15,000 TEUs on the Asia-U.S. East Coast trade.
“Given the carriers’ focus on profitability in 2012, and the recent rate declines which have brought rates down to levels seen in early March 2012, shippers would be prudent to take up pro-active discussions with their carriers to ascertain exactly which additional sailings will be blanked in order to avoid last-minute disruptions of their supply chains,” SeaIntel said. - Eric Johnson