New Alliance the Reason for Postponing Mega-Ship Deployment?


CMA CGM Plans To Delay The Mega-Ship Deployment

CMA CGM is now postponing its decision of deploying  fleet of super-sized container ships to carry goods between Asia and the U.S. due to “the current trans-Pacific market situation.”


The French shipping line has earlier announced that it will operate a fleet of super-sized containerships to carry goods between Asia and the U.S.

Now, the company has revealed its plans to postpone the deployment due to “the current trans-Pacific market situation.”  Also, the decision comes as the company has entered into new alliances.

Two theories float around citing reasons for postponement.  One is overcapacity and falling freight rates between Asia and the U.S trade route that may worsen due to capacity addition.  The other reason what analysts say is that CMA CGM’s new partners would not have welcomed the addition of more capacity on a route where they’re already struggling to generate profits.

Paul Bingham, an economist with the Economic Development Research Group Inc. said: “There’s no point in deploying more capacity if they’re only going to push freight rates down further, To have announced this in the first place seemed a little bit aggressive, or at least premature.”

Federal Maritime Commissioner, William Doyle, revealed: “Based on conversations with the parties of the new alliance, it would make sense that they’re trying to figure out what vessels and what services they’re going to use as the alliance.”

Henry Pringle, a maritime consultant at AlixPartners, said CMA CGM was a “trailblazer” in sending 18,000-TEU ships to the U.S., adding that “many shipping companies are still very reluctant to deploy their ship assets into ports that are untested.”

He added that: CMA CGM’s postponement of the mega-ships “could be seen as an alignment of policy with its new partners.  And until U.S. ports prove they have the resources–from larger cranes to land-side infrastructure–to handle such large cargo volumes at once, they shouldn’t hold their breath waiting for the 18,000-TEU ships to return.”

Source: WSJ



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