All-water ship capacity back to normal by May

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Jan 2008

Shipping lines that have pulled capacity out of the China-United States all-water trade because of both the season downturn and the general state of the US economy, are expected to start filtering tonnage back into the trade towards the end of the second quarter - three months later than last year. Lines such as CMA CGM, and those in the New World Alliance, as well as the CKYH Alliance, should start bringing back capacity around April, with a May/June return to normalcy within their sights on the US East coast trade. Almost all the downturn in capacity supply and market demand concerned services covering China, with the Southeast Asia region only experiencing a limited fall off. Alarmingly some lines have cut capacity by as much as 50 percent to suit market demand.As one trade manager source pointed out: "The 2007/2008 downturn has gone on a lot longer than in previous years, and it has become increasingly noticeable that much of the downturn has come from the eastbound leg and the dramatic fall off in consumer demand in the US."We were expecting a slightly longer reduction in our strings and capacity utilisation, but not something that would go on for almost half a year."The fact that most of the services withdrawn and capacity taken out concerns the China-US trade, is a strong indication the driving force behind it all centre on the US consumer demand, mostly for household goods."As the US dollar slowly but surely continues to strengthen, there is renewed encouragement that the US import market will start to pick up for the second half of 2008 and ensure the so-called peak season period at least shows some degree of confidence from the normally high profile consumer market.According to PR News Service databases, some lines cut back on almost a quarter of their Asia-US East coast capacity starting from the end of 2007, pulling strings and switching vessels to the more lucrative Asia-Europe-Mediterranean trade, a move that now makes it extremely difficult to switch back to the previous deployment. With Asia-Europe and Asia-Mediterranean market growth this year expected to top 20 percent with no sign of any let up, and a dearth of suitable panamax-sized tonnage on the open market or in shipping line fleets, some lines are certain to find it difficult to find the ideal capacity to re-instate their all-water services.Evergreen and Zim, for example, have committed their capacity from the Asia-US East Coast Express (AUX), which ended in December to the Asia-Mediterranean and Asia-North Europe trades respectively.In the case of Zim, the vessels are laying the foundations for the future deployment of 10,000+ TEU vessels on Asia-Europe from 2010 onwards, and there is no way the line, after over a US$1 billion expenditure on its newbuilding orderbook, will back-track on that decisionZim announced recently it would change its current North Atlantic service from March. The new service, named ATX for Atlantic Express, will replace the current NEX service and will be operated in a vessel sharing agreement with the member carriers of the Grand Alliance. The ATX service will operate four 4,000 TEU container ships, offering weekly, fixed-day sailings between the North European ports of Rotterdam, Hamburg, Le Havre and Southampton and the US East Coast ports of New York, Norfolk and Charleston. ZIM will provide one of the vessels which will be Dublin Express.The ATX will replace the NEX service and join the other Zim transatlantic services, which include AUE (North Europe-US East Coast), ZCS (Mediterranean-US and Canadian East Coast), MUS and MGX (Mediterranean-US Gulf). All these services are connected to the Zim regional feeder networks and are marketed and serviced by the ZIM offices in the Americas and Europe.The new ATX service will operate more efficient tonnage, reducing the bunker consumption per slot-mile, offering a more environmentally friendly solution.