[300120.EN.SEA] Major Alliances Up Southeast Asia to US West Coast Shipping Capacity

LEADING container shipping lines will this year offer more capacity between Southeast Asia and the US west coast, signalling that the US sourcing shift away from China is showing no signs of dissipating soon.

The move could also help west coast ports recover some of the cargo that has shifted eastward thanks to a growing number of Southeast Asia container shipping services targeting the east and Gulf coasts.

Hapag-Lloyd and Japanese liner joint venture Ocean Network Express, plus members of THE Alliance along with Yang Ming, said the new services will provide "increasing frequency particularly from Southeast Asia, as well as new direct port coverage and improved transit times."

The expanded service offering also hints at how THE Alliance will deploy capacity from its newest member, Hyundai Merchant Marine (HMM), reported New York's FreightWaves.

Starting from the second quarter, THE Alliance said it will replace existing Asia-Europe and Asia-west coast routes, FE5 and PS7, respectively, with a "pendulum" service that will cover all three continents and will deploy 18 vessels of 14,000 TEU in capacity.

Hapag-Lloyd said the new service means weekly sailings between Southeast Asia and southern California will increase to three.

Another Asia-US west coast service, PS3, will add a call in Vietnam's northern Haiphong port, in addition to the country's southern port of Cai Mep.

Along with the added Southeast Asia coverage, Hapag-Lloyd said it will also launch a new transpacific route that will cover central China and Korea.

As for HMM, THE Alliance will rotate its ships into the transpacific and Asia-Europe markets.

Hapag-Lloyd said it plans to deploy two 20,000+ TEU ships in two of its Asia-north Europe services, which will "bring economies of scale and positive environmental benefits". The current services have weekly capacities ranging from 15,000 to 20,000 TEU.

HMM has ordered 12 vessels of 23,000-TEU capacity, with delivery of those ships expected to begin in the second quarter and end by September 2020, PR News Service said. Once all the vessels have been delivered, THE Alliance will have doubled its Asia-Europe service capacity, according to PR News Service's Paul Richardson.

In the transpacific, HMM may deploy four ships in the 11,000- to 12,000-TEU range on a service from Asia to the Pacific northwest, said Mr Richardson.

The potential for more containers to move through southern California could help put Los Angeles port back on a growth trajectory. Total containers handled in 2019 fell by 1.3 per cent year on year.

Port of Los Angeles executive director Gene Seroka told CNBC senior editor that the drop in trade with China and the rise of Southeast Asian manufacturing that can easily access both coasts is weighing on the west coast.

US Census data show the value of Chinese imports through the Port of Los Angeles dropped 14 per cent to US$107.8 billion through November 2019. Exports to China through Los Angeles dropped a similar amount to $6 billion. Imports from Vietnam through Los Angeles, on the other hand, jumped by 9.5 per cent to $17.6 billion.

The drop in volume coming through the US' largest port rippled through the supply chain. Outbound tender volumes for the Los Angeles market dropped 16 per cent over the past year, while outbound loaded 40-foot container volumes were down 11 per cent.

The Union Pacific Railroad saw cumulative intermodal container volumes decrease by seven per cent to 3.5 million last year, as the trade slowdown, service cuts and disastrous weather took a toll. BNSF saw its intermodal volumes decline 4.5 per cent.

To attract back the volume, Mr Seroka laid out a series of efficiency moves, the first of which will be monetary incentives to marine terminals to reduce truck turn times, aimed directly at rewarding drayage efficiency.

"Depending on the percentage a terminal can reduce truck turn times, they will be monetarily rewarded on each container unit," Mr Seroka said. "The higher the percentage of reduction, the bigger the reward."

The port of Los Angeles also said it "will continue to explore locations for off-dock chassis yards." Yusen Terminals has developed a near dock chassis staging area, and the port is currently in talks with Pacific Crane Maintenance Company to develop an off-dock chassis facility that complements APM Terminal's Pier 400 operation.

Source : HKSG.