MSC, Hapag-Lloyd and Wan Hai Lines have taken new actions

MSC, Hapag-Lloyd and Wan Hai Lines have taken new actions
Classification: Maritime News Source: China Aviation Weekly Time: June 9th, 2023
The current container transportation market is in a state of flux, and the previously most profitable routes may have experienced a steep drop in freight rates in the blink of an eye, catching liner companies off guard.
Adjusting the deployment of transportation capacity in a timely manner according to market changes is a major challenge for liner companies. Recently, liner companies including Mediterranean Shipping (MSC), Hapag-Lloyd, Wan Hai Lines, etc. have adjusted their transport capacity.
A survey by Alphaliner shows that compared to a year ago, major global liner companies have reduced their capacity on the Asia North American route.
Among them, MSC has the largest downward adjustment, with its proportion of transportation capacity on cross Pacific routes dropping from 16% to 9%.
Alphaliner stated that MSC's operational capacity has exceeded 5 million TEUs, of which 23% is deployed on Asia Europe routes, 14% on the Middle East and Indian Peninsula routes, 13% on African routes, 12% on Latin American routes, and 10% on transatlantic routes. In addition, MSC also operates 7% of its capacity in the European regional market.
Maersk, which ranks second in the capacity chart, also invests the most capacity on the Asia Europe route, but its capacity deployment on other routes is different.
At present, Maersk's operating capacity is 4.1 million TEUs, of which 22% are deployed on Asia Europe routes, 18% are deployed on trans Pacific routes, and 18% are also deployed on Latin American routes.
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Although the Asia Europe route is still the route with the most capacity deployed by MSC and Maersk, there are also some liner companies choosing to explore new paths and invest more capacity in other markets.
Alphaliner said that, unlike MSC and Maersk, Hapag-Lloyd, another liner giant, has deployed more capacity on Latin American routes than on Asia Europe routes since it integrated with CSAV and invested 13000TEU series container ships.
Hapag-Lloyd's performance in the first quarter of 2023 also proves this. Rolf Habben Jansen, CEO of Hapag-Lloyd, said at that time that the company's business performance on Latin American routes was "stronger" than that in other regions, and the freight volume of this route was very sufficient.
Looking at the capacity deployment of various shipping companies, Alphaliner believes that currently, major global shipping companies still have the largest capacity deployed on the Asia Europe route, accounting for 21% of the total global fleet capacity. The capacity scale of the Asia North American route ranks second, accounting for 18%.
However, since 2023, the freight rates on the east-west main routes have continued to decline.
According to the Shanghai Export Container Comprehensive Freight Index (SCFI) released by the Shanghai Shipping Exchange, the freight rate of Port of Shanghai's export to the European basic port market has dropped from US $1050/TEU at the beginning of the year to US $846/TEU at the beginning of June, a decline of 19.4%; The freight rate of Port of Shanghai's export to the basic ports of West America and East America dropped from US $1414/FEU and US $2845/FEU at the beginning of the year to US $1398/FEU and US $2374/FEU at the beginning of June, with a decrease of 1% and 16.5% respectively.
Alphaliner believes that if the spot and agreed rates on the two main routes, the Asia Europe route and the Trans Pacific route, remain slightly above breakeven levels, there may be more liner companies considering shifting their capacity from the main routes to regions such as Latin America, Africa, and the Middle East, in an effort to find more profitable transportation markets.
Alphaliner said that Wan Hai Lines is such a company. The company has reduced its service network of trunk routes and expanded its market coverage in Asia. Data shows that Wan Hai Lines currently accounts for about 65% of its total freight volume in the Asian market.
Wan Hai Lines is not a member of the three major alliances. According to the analysis of an industry agency, the practice of Wan Hai Lines to reduce its transport capacity across the Pacific Line may reflect the trend of non alliance member liner companies to flexibly respond to market changes and adjust their transport capacity deployment.
Sea Intelligence, a shipping consulting firm, also believes that non alliance member shipping companies are gradually withdrawing their capacity from trans Pacific routes.
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Changes in capacity share of non alliance enterprises on cross Pacific routes (calculated based on an average capacity of 3 weeks)
The latest analysis report from Sea Intelligence shows that from 2020 to 2022, non alliance member liner companies invested a significant amount of capacity on cross Pacific routes. During the peak period of spot freight rates, the capacity deployed by these liner companies accounted for 15% of the total capacity on the route, compared to 10% previously.
Since the drop in spot freight rates in the second half of 2022 and the easing of the shortage of transportation capacity supply, the share of transportation capacity of these liner companies has gradually declined. At present, these liner companies have a market share of about 10% in the cross Pacific routes.