Carriers will need to cut Asia-Europe services as deluge of new tonnage arrives

SeaIntel data shows that the coming 12 months will see an 11.5% capacity injection on the Asia-Europe tradelane, giving rise to a need for each alliance to close one service.

Comparing the second half of 2019 with today, 2M will only experience a 3.2% growth in deployed capacity, whereas THE Alliance will experience a growth of 11.9% in their deployed capacity, and Ocean Alliance will see a significantly higher capacity increase of 24.6%.

“With the most realistic scenario of a 5% growth in demand, we find it unlikely that the Asia-Europe trade will be able to absorb this additional capacity without the need to reduce the number of weekly services,” SeaIntel states in a recent report.

The overcapacity is set to be exacerbated with news of CMA CGM’s nine-ship order for 22,000 teu vessels filtering through this week.

“To solve this problem without closing services in Asia-Europe, carriers might cascade the displaced vessels into other trade lanes. The closure of three full weekly services on Asia-Europe will lead to the need to deploy approximately 30 large vessels on other trades,” SeaIntel stated.

SeaIntel CEO Alan Murphy added: “Carriers could choose to inject some of the new large vessels in other trades, however this would lead to an even greater need to reduce the number of services in such trades, as they would be shorter and smaller than Asia-Europe.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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