Asia-EU ocean cargo trade lane heats up

Competition on the Asia-Europe trade will get even more intense next year as carriers are to restructure their networks and reshape their alliance partnerships, with more capacity additions on the horizon.

Last week, the Grand Alliance (Hapag-Lloyd, NYK, OOCL) and New World Alliance carriers (APL, HMM, MOL) announced the creation of a “G6 Alliance”, pooling the six carriers’ fleets on a consolidated Asia-Europe network.

This move closely follows the announcement of the MSC-CMA CGM alliance on the same trade. Both initiatives aim to counter Maersk, which currently offers the most complete coverage of the FE-North Europe trade with its “Daily Maersk” product launched in October.

According the Paris-based consultancy, Alphaliner, these developments forebode that the “unrelenting rate war” on the Asia-Europe trade is set to continue in 2012.

The Peak Season Surcharge which carriers commonly try to apply on the FE-North Europe trade in late December has been postponed by some shipping lines, as the expected year-end surge in bookings did not materialize. Carriers will have one last chance to raise rates in January prior to the Lunar New Year, which falls on January 23. However, with a weaker outlook for Chinese exports next year, any rate gains will likely be short-lived.

The much hoped for rationalization of Asia-Europe services is not bound to materialize, as the consolidation of services under the new partnerships fails to remove any excess capacity. New tonnage will continue to flow from shipyards,

“If one of Maersk’s intentions in launching the “Daily Maersk” product in October was to kill off its competitors with its comprehensive coverage of the FE-North Europe trade, the strategy is clearly not working out as planned,” said Alphaliner’s commercial director, Stephen Fletcher.

The “G6 Alliance” have unveiled their new line-up to match Maersk’s offering in 2012. This follows the move by MSC and CMA CGM which have also teamed up with a joint effort to match Maersk on the FE-North
Europe trade.

The remaining carriers in the trade will undoubtedly look to do the same, with none of the incumbent carriers interested in falling off on the wayside, Fletcher said.

“With all gloves off on the Asia-Europe trade in 2012, the rate war is expected to intensify - spelling disaster for all carriers on the trade,” he added.