[210812.EN.SEA] Evergreen And Hanjin Boost Asia-Europe Capacity Despite Weak Demand Outlook

DESPITE increasing signs of weak trade demand, Taiwan's Evergreen and Hanjin Shipping of South Korea have added a new Far East-North Europe loop, which will boost the weekly capacity on the new CEM/CUS service by 9,160 TEU.

The two carriers will jointly operate the new service with nine ships with capacities of between 8,450 and 10,100 TEU. The service will initially run on a ten week rotation, with one sailing expected to be skipped in early October for the Golden Week holidays in China. The carriers have the option to return to a nine week rotation after the holidays or add an additional ship at a later stage to the service.

Evergreen's new CEM/CUS will replace the existing CEM/AEX1 service that was jointly operated with CSCL. The rotation of the CEM/CUS will follow closely the existing CEM/AEX1 rotation, with the addition of a Hong Kong call on its westbound leg. Hanjin will contribute two vessels to the CEM/CUS while Evergreen will put in five of its newly delivered 8,450-TEU 'L'-class vessels and two 10,062-TEU ships shifted from the CEM/AEX1.

CSCL will continue to run the AEX1 on its own further to the departure of Evergreen, retaining CMA CGM, Zim, Yang Ming and COSCO as slotters, while 'K' Line joins Hanjin with slots on the new CUS. CSCL's revised AEX1 will deploy nine ships of 5,700-9,600 TEU with an average capacity of 8,290 TEU on the new standalone service, with one sailing expected to be voided in early October.

CMA CGM, Zim, Yang Ming and COSCO will continue to take slots on the AEX1, while 'K' Line joins Hanjin with slots on the new CUS, according to Alphaliner.
The additional capacity comes at a time when average utilisation on the Asia-Europe trade has weakened to a year-to-date low in June. Initial data from Container Trade Statistics (CTS) shows Asia-Europe liftings in June at only 1.08 million TEU, or 8.8 per cent lower than the same period last year and also 8.8 per cent lower than May. Capacity utilisation on the trade reached an estimated 79 per cent in June, the lowest level since November last year.

Full year demand growth is expected to shrink by 3.6 per cent based on Alphaliner estimates, following a first half shrinkage of 2.1 per cent according to the preliminary figures from CTS. The slight improvement observed in June on utilisation levels was partly due to void sailings implemented by Maersk and the CKYH carriers. The poor loading factors have been the primary reason for the carriers' failure to push through with the August rate increases, and the implementation of the peak season surcharge on the trade, which was supposed to take effect from August 1 to September 30.

The lacklustre peak season has caused rates to slide, with further weakness expected despite repeated attempts by carriers to push for higher rates. It will become increasingly difficult for carriers to push through with further rate increases in the absence of capacity reduction.

Source : HKSG.