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PostHeaderIcon Asia-Europe January-November box volume up 3.9pc in 2013 to top 2012

CONTAINER volumes on the Asia-Europe trade lane for January to November rose by 3.9 per cent compared to the same period the previous year to total 12.7 million TEU, setting 2013 on track for beating the full-year result for 2012.

However, 2013's container volumes still lag 1.4 per cent behind 2011 figures for the first 11 months of the year.

The volume handled in November last year totalled one million TEU, compared with 999,400 TEU a year before, but volumes for the month were 2.8 per cent less than in the same month in 2011, reports Lloyd's List.

A breakdown of the results show that Asia-northern Europe volumes in November were up 3.1 per cent year on year to 676,101 TEU.

For the full year, this sub-region also looks set to beat 2012's results as 8.3 million TEU was transported during the first 11 months of last year compared with 8.1 million TEU during the same period in 2012.

On the Asia to the western Med trade, November's volumes were up 4.7 per cent over November 2012 at 172,536 TEU.

Volumes in this trade lane during the first 11 months of last year reached 2.2 million TEU, up four per cent on 2012.

Asia to the eastern Mediterranean/Black Sea was the strongest performing sub-region in 2013. Volumes on the trade lane for November rose 6.5 per cent year on year to 190,562 TEU.

During the first 11 months of 2013 volumes grew to 2.3 million TEU, 10.5 per cent up on 2012.

 

PostHeaderIcon Seven Container Lines to Cooperate on Intra-Asia Service

As part of a slot sharing agreement, seven container lines will cooperate on three existing Far East-to-Indian subcontinent services, effective in February 2014.

APL, Maersk Line, OOCL, CMA CGM, Emirates Shipping Line, Hamburg Süd and Regional Container Lines will employ 18 vessels with a total capacity of about 17,500 TEUs on the three services. The group will offer three sailings per week covering South Korea, China, Malaysia, Singapore, Sri Lanka, India and Pakistan, compared with one weekly sailing that is currently offered by each carrier.

“Our multi-carrier cooperation will provide more frequent sailings between Asia’s major trading hubs, and at the same time eliminate unnecessary service duplications,” the partner carriers said in a joint statement.

The new port rotations for the three services will be as follows:
•The north loop will be operated by CMA CGM and Maersk Line: Tianjin, Dalian and Qingdao, China; Kwangyang and Busan, South Korea; Ningbo, China; Hong Kong; Singapore; Tanjung Pelepas, Malaysia; Colombo, Sri Lanka; Pipavav and Nhava Sheva, India; Port Qasim, Pakistan; Singapore; and Tianjin.
•The central loop will be operated by Hamburg Süd, OOCL and Regional Container Lines: Shanghai; Ningbo; Xiamen, China; Hong Kong; Singapore; Colombo; Nhava Sheva; Pipavav; Port Klang, Malaysia; Singapore; Hong Kong; and Shanghai.
•The south loop will be operated by APL, Emirates Shipping Line and OOCL: Nansha and Chiwan, China; Hong Kong; Singapore; Colombo; Nhava Sheva; Pipavav; Colombo; Port Klang; Singapore; and Nansha.

Although APL is part of the G6 Alliance, and Maersk Line and CMA CGM are part of the planned P3 Network, the seven carriers in this slot-chartering agreement are consolidating their intra-Asia services in the face of sliding freight rates, overcapacity and the continued pressure to reduce operating costs.

Containerized rates in this trade lane have been steadily declining since 2012, according to data from Container Trades Statistics. In the Far East-to-Indian subcontinent and Middle East route, rates have fallen from the CTS index level of 122 in September 2012 to 98 in November 2013. In the opposite direction, rates have fallen from 112 in May 2012 to 79 in November 2013.

In terms of volume, containerized exports from the Far East to the Indian subcontinent and the Middle East recorded month-over-month declines from August through November 2013, following a spike of 31.7 percent in May. Exports from the Indian subcontinent and Middle East to the Far East saw more pronounced declines in volume, registering double-digit year-over-year drops in nine of the last 12 months.



 

PostHeaderIcon P3, G6 to Spark Change in Trans-Atlantic Trade

The trans-Atlantic, the mature granddad container trade lane where nothing much happens, is looking forward to a rare burst of excitement in 2014.

That’s because it’s one of the three liner routes, along with the giant Asia-Europe and trans-Pacific trades, preparing for the planned launch of the P3 Network among the world’s three largest carriers — Maersk Line, CMA CGM and Mediterranean Shipping Co. — in the second quarter of the year.

With the alliance awaiting regulatory approval and yet to publish details of its five new services, the trade got a taste of things to come with the news in early December that the G6 Alliance of APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK Line and OOCL plans to expand on the Asia-Europe and Asia-east coast North America routes to the trans-Atlantic. Also, in early January came news that Hanjin Shipping will withdraw entirely from the trans-Atlantic, not even serving the market through slot-charters.

For now, trading conditions are as calm as ever, with vessel capacity stable, traffic subdued and no larger ships being cascaded from the major east-west routes.

Although cargo growth between northern Europe and the east coast of North America remains poor, carriers are still effectively managing vessel capacity, according to London-based consultant and research analyst Drewry.

Westbound shipments from Europe totaled nearly 700,000 20-foot-equivalent units in the third quarter of 2013, up 3 percent from a year earlier, according to PIERS, the data division of JOC Group Inc. But the 3.7 percent growth in traffic in the first nine months of the year was down from 4.7 percent growth in the same period in 2012. Eastbound traffic totaled 484,395 TEUs in July-September period, up 4.3 percent year-over-year. Year-to-date eastbound volumes of nearly 1.5 million TEUs were up just 0.8 percent, according to PIERS data.

PIERS expects solid westbound growth of 8.3 percent, to 2.9 million TEUs this year, but the eastbound trade likely will be flat at just more than 2 million TEUs.

Spot freight rates have risen, in contrast to declines on other routes, driven by carriers’ vessel capacity management and general rate increases. The spot rate for a 40-foot container from Rotterdam to New York had risen 14 percent between February and the end of September, while the eastbound rate jumped 17 percent over the same period.

Trading conditions on the West Mediterranean-east coast North America route are a lot tougher, with capacity utilization slumping to just 40 percent on the eastbound leg in September. “It’s not a nice place for carriers to be,” according to Drewry.

Nevertheless, a quiet new year is in the cards, especially on the North Europe route, before the P3 shakes up the trade in the spring. “Westbound, and to a lesser extent eastbound, freight rates will continue to rise over the winter season, providing sailing cancellations remain sensibly managed,” Drewry said. “Only fine-tuning is necessary.”

The P3 is sure to destabilize the trade, at least for a time, in large part because its three members control approximately 40 percent of the effective capacity between northern Europe and North America. The ships to be deployed on the new P3 services will be significantly bigger than those of its rivals, giving the P3 carriers economies of scale that the competition could not ignore.

The announcement that the G6 plans to have its trans-Atlantic operation up and running by the second quarter of 2014 to coincide with the launch of the P3 foreshadows a feisty battle for market share through the second half of the year. That Hapag-Lloyd’s dominant 24 percent market share proved no obstacle to expanding the G6 to the trans-Atlantic only underscored the potent threat of the P3 to smaller carriers. The G6 plans to deploy 42 ships on five trans-Atlantic services, including two pendulum services calling at 25 ports in the U.S., Canada, Panama, Mexico, the Netherlands, the U.K., France, Belgium and Germany. The member carriers will continue to market their services individually.

The G6 move will intensify pressure on independent operators on the route and the CKYH Alliance of Cosco, “K” Line, Yang Ming and Hanjin Shipping, which risk between squeezed in a battle for cargo between the P3 and G6 carriers.

“Due to lackluster cargo growth and unexciting prospects ahead, little change to ocean carrier services is likely before the second quarter of 2014,” Drewry said. But all bets are off in the spring when the world’s leading carriers prepare to inject a little long overdue excitement on the Atlantic.

 

PostHeaderIcon P3 to Change Global Maritime Landscape

It’s too early to predict precisely how the container shipping business will play out in the new year, but there is one certainty: The P3 Network will shake things up in a big way assuming it passes muster with regulators. In the six months since Maersk Line, Mediterranean Shipping Co. and CMA CGM announced they would pool their biggest ships in a giant vessel-sharing alliance in the main east-west trades, competing liner companies have been playing catch-up in an effort to match the P3’s market size and power.

As 2014 rolls out, shippers are likely to benefit from increased freight rate competition as competing carriers try to preserve market share in the face of the new mega-alliance. When the P3 launches some time during the second quarter, it may initially increase capacity on the trans-Pacific and Asia-Europe trade lanes. “It may drive rates down because of that,” said Richard Smith, vice president of transportation at Sears Holdings. He said it would be difficult for carriers to nail down rate increases in their negotiations for new trans-Pacific contracts next year.

The result will be increased rate volatility and the possibility that competing carriers will consolidate services with each other and/or with the two big existing alliances. “The other lines have to look toward forming more operational alliances, not necessarily like the P3 or the G6, but alliances where they can deploy their big ships and realize cost savings,” said Neil Dekker, head of container research at Drewry Shipping Consultants in London.

The G6 in December unleashed the first response, saying it plans to expand into the Asia-U.S. West Coast and trans-Atlantic trades to compete with the P3.

When the world’s three largest carriers launch the P3 Network, they will actually be reducing the number of ships they deploy in the main east-west trades to 252 from 346 currently, but the ships they deploy will be their largest and most fuel-efficient, which will cut their slot costs and enable them to offer lower freight rates.

Although there will be fewer total ships operating in east-west services, the competing alliances may not have enough firepower to defend their market shares. “The existing alliance structure will not be sufficient to be able to compete successfully. P3 will have a better product than anyone else, because they cover more port pairs and they will be able to produce it at a lower cost,” said Lars Jensen, CEO of research analyst SeaIntel. “All members in both alliances are searching high and low for a solution that will allow them to maintain the existing alliance structures and compete with the P3 by associating with other carriers.”

Evergreen Line, which already has taken delivery of the first of 10 13,000-TEU ships, is in talks to expand its cooperation with the CKYH Alliance among Cosco, “K” Line, Yang Ming and Hanjin Shipping. “It makes sense for Evergreen to firm up its position by forming an alliance where they can leverage slot-charter deals, realign their ships in bigger service profiles and offer their customers more port pairs,” Dekker said.

UASC and China Shipping, which cooperate in a vessel-sharing alliance and slow-charter swaps on the trans-Pacific, and have a lot of capacity coming out of shipyards, also could form their own alliance or combine with the CKYH, or the G6, which consists of APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK Line and OOCL. United Arab Shipping and China Shipping each have five 18,000-TEU ships on order, which will make up a single string in the Asia-Europe trade, and UASC has another five 14,000-TEU ships on order, so the two carriers are becoming heavyweights.

“If you have that duo plus Evergreen teaming up with the CKYH, then you have something approaching what might compete with the P3,” Jensen said. “If you get that duo teaming up with the G6, you could also make the same argument.”

There may only be room for one big new alliance consisting of carriers that already have or will have new ships of 16,000 TEUs and up, and it may take several years for such an alliance to emerge because of the difficulty of meshing networks and services.

“Once they get to that point, the carriers with the big ships that are part of that competing alliance are still in the game for the major east-west trades, but the carriers that do not make it into that alliance are not viable on the main east-west trades over the long-term,” Jensen said. “They could become niche carriers for the north-south trades and the intra-regional trades, but not on the main east-west conveyor belts. It’s a commodity, and it’s all about producing it at the lowest possible cost.”

When the P3 is launched, the Daily Maersk service from Asia to Europe, which has been billed as a conveyor belt, may expand to include vessels from MSC and CMA CGM. Rodolphe Saade, executive officer of CMA CGM told the JOC that the French carriers’ vessels would become part of Daily Maersk.

Allen Clifford, executive vice president of MSC in the Americas, said that when carrier services in the main east-west trades become a commodity, the key to differentiating services on the east-west conveyor belt will become customer service. But Jensen thinks customer service will become irrelevant “if you get the conveyor belt to work without a hitch, because they just have to move the stuff from A to B.” Customer service right now is important because the service often fails, so carriers need to take corrective action, he said.

The P3 isn’t quite a done deal yet. It still must pass muster with regulatory authorities in China, Europe and the U.S. The Federal Maritime Commission in December held a summit with regulators from China and the European Union that initially was to focus on the P3 but was broadened to include alliances as a whole. The FMC said its concerns stemmed in part from the market share the P3 would control in the three east-west trades: 42 percent in Asia-Europe, 40 to 42 percent in the trans-Atlantic and 24 percent in the trans-Pacific.

As a result, the routes and services may not look quite like what the world’s three largest container lines planned last year. The EU antitrust authority, known as DG Comp, has a higher political profile in Europe than the FMC and is more likely to force changes on the P3.

“The P3 might be told they can’t have that many services to Europe so that the politicians can actually show they are doing something for competition,” Jensen said. “The Chinese authorities are the wild card, because no one has been through that process with them before.”

But he said that if the P3 gets approval as planned, it would only perpetuate the difficult market conditions. “It means the current oversupply, the current fight for survival, the current volatility will only continue, unchanged for at least the next couple of years until there is another attempt at consolidation on this scale.”

 

PostHeaderIcon Hanjin to Drop Trans-Atlantic Service

Hanjin Shipping is pulling out of several money-losing trades to cut its ongoing losses.

It told its customers last week it will drop its trans-Atlantic service because of what it called “dismal market conditions which do not support operational costs." Although it is rare for a major carrier to pull out of a large, established trade lane such as the trans-Atlantic, Hanjin will stop serving customers in the trade lane after May.

“We are not in that trade lane any longer,” said Mike Radak, senior vice president of sales and operations at Hanjin Shipping USA.

Hanjin provides trans-Atlantic service on what it calls the New Trans-Atlantic service, the lone service on that trade operated by the CKYH alliance, which also includes Cosco, “K” Line and Yang Ming.

Radak said that “hopefully” Hanjin’s partners in the CKYH Alliance will service its customers’ cargo. He said Hanjin does not plan to offer service through slot charter agreements with its partners or other carriers. Hanjin operates one of the four 4,500-TEU vessels that the alliance deploys on the trade.

The money-losing South Korean carrier said the final voyage on which it will be part of the NTA service will be that of the Yang Ming Vancouver leaving New York-New Jersey on May 13.

Hanjin, which had warned that it would close down unprofitable trade routes, is also withdrawing from the trade between the Far East and the Black Sea. It will end its slot charter agreement with the Asia-Black Sea Express service operated by China Shipping, “K” Line, Yang Ming, PIL and Wan Hai, according to Alphaliner.

It is also ending its weekly trans-Pacific service to Portland, Ore. this month, according to the port.

Hanjin’s loss widened in the third quarter of 2013 when it reported a net loss of 432.8 billion won (about US$404.9 million) from January to September, versus a net loss of 386.9 billion won in the same period of 2012. Hanjin’s president and CEO, Young Min Kim, resigned in November following the third-quarter loss, saying he was taking responsibility for the company’s continuing losses

 
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