Maersk-MSC Suspends Asia-Europe Loops To Avoid Blank Sailings

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In a major development, Alliance partners Maersk and MSC have announced that they are to “temporarily suspend” their AE2/Swan Asia-North Europe loop from the end of the month until mid-November, removing up to 20,000 teu a week from the trade, reports The Loadstar.

Sailings Going Blank?

Weakening demand and plummeting freight rates have so far obliged Asia-North Europe carriers to blank two-thirds more sailings than during the same period of last year, and now the 2M alliance is to suspend the loop for the second consecutive year.

Matching Reduced Demand?

Moreover, Maersk said it would also “balance its network to match reduced market demand for the upcoming [Chinese factory shutdown] Golden Week” and withdraw its AE7, MSC’s Condor, headhaul string in week 41, thus removing around another 17,000 teu of capacity from the market that week.

Matching Capacity

MSC said the AE2/Swan suspension would “help us to match capacity with the expected weaker demand for shipping services”, and in a customer advisory, Maersk said the  service would resume “in line with demand pickup”, suggesting that the suspension could be extended if demand on the route continued to be soft.

Similar Move by Other Carriers

This year, according to Alphaliner data, a total of 42 Asia-North Europe headhaul sailings were blanked in the first three quarters, compared with just 16  in the first nine months of 2018.

Also, at the end of last month, HMM terminated its AEX service, which it operated separately to its slot charter arrangement with the 2M. This removed some 4,800 teu of weekly capacity from the trade, albeit that the South Korean carrier replaced its ‘independent’ service with a slot charter deal with THE Alliance ahead of it joining the vessel sharing group as a full member in April next year.

The 2M adopted a similar strategy last year, suspending the AE2/Swan from September to December, rather than using the blanked voyage tool favoured by the Ocean and THE alliances. It  said mothballing loops was “a better option for shippers”.

Rivals Taking Advantage of this?

However last year rival carriers took commercial advantage of the service suspension. Indeed, one rival carrier source told The Loadstar the 2M suspension was the “best news we have had in a long time”.

Until now, the 2M partners have not voided any sailings, despite the peak season proving to be a damp squib and spot rates having slumped to $757 per teu as of last week, according to the reading of the Shanghai Containerized Freight Index (SCFI) – a startling 19% below the level of a year ago and an alarming 24% drop from early January.

The planned six-week suspension of the AE2/Swan loop will see 12 17,800-20,500 teu vessels idled.

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Source: TheLoadStar

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