Maersk Revamps Network For New Normal

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Credit: Mika Baumeister/Unsplash

Major Chinese export markets are showing signs of a recovery after the steep post-Golden Week holiday decline, led by a rebound in demand for intra-Asia services, according to the latest Asia-Pacific market update from Maersk, says the article published in The Loadstar.

New normal

Nevertheless, the “new normal” could see Maersk and its liner peers forced to make radical changes to their networks, as they adapt services to meet a short-to-longer-term reduction in demand.

Maersk said the global economic outlook appeared to be deteriorating against a background of slowing growth and elevated inflation levels.

“As a result, global container volumes are continuing to fall, with negative growth in virtually all the main markets, causing Maersk to reduce capacity on major ocean trades from Asia to match demand,” says the report.

Stabilizing demand

However, Maersk’s regional head of ocean management for the Asia-Pacific region, Morten Juul, remains positive. He said: “The demand for ocean transport is stabilising and we are adjusting our network to match the new reality.”

But the slump in demand resulted in a collapse in container spot rates, which Maersk’s report concedes has been “dramatic”.

Indeed, the spot freight rate indices covering exports from China to Europe and the US have suffered several consecutive weeks of high double-digit losses, with, for example, short-term rates from China to North Europe plunging by about 75% since August.

Rate reductions

Meanwhile, carriers serving the major tradelane have been obliged to offer their contracted customers “temporary rate reductions”, or, in some cases, waive contract terms altogether and allow shippers to make bookings via their digital platforms at substantially lower rates.

And, The Loadstar understands, at least one of the alliances is considering a ‘winter schedule’ between Asia and North Europe that could see carriers take out a third of their weekly capacity leading up to the Chinese New Year holiday, beginning on 21 January.

A UK-based carrier contact told The Loadstar “something had to be done” to adjust supply to meet demand that would bring some stability to the market and enable shippers to plan their supply chains.

“At the moment, it’s complete chaos out there, and the last-minute blankings don’t help at all. But getting the partners to agree on a loop suspension is another matter,” he said.

Quick rebound

However, Maersk said there were reasons to be optimistic about the world’s largest tradelane, intra-Asia, which had seen demand bounce back after the Golden Week holiday earlier this month.

“Demand rebounded quickly from China,” says the report, noting that Maersk’s Sealand Asia subsidiary had “maintained healthy utilisation levels” and was in the process of launching a new service connecting the ports of Busan in South Korea, Kaoshiung in Taiwan, Nansha in China and Haiphong in Vietnam.

And, Maersk said, “despite the gloom there are signs of buoyancy” in some retail sectors in the US, and called on shippers to plan their supply chains early.

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Source: The Loadstar

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