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The Ocean 3 shipping alliance formed by CMA CGM, CSCL and UASC is countering weak demand and critically low shipping rates by lowering capacity.
Ocean 3 announced it would withdraw one of their four Far East-North Europe strings for 12 consecutive weeks starting from the end of June.
The move is the latest sally in the ongoing Asia-Europe rate war, as carriers try to secure trade amid weak demand. The announcement is unexpected since it dovetails with the start of the summer peak season, which runs from late June to early September on the Asia-Europe trade.
The O3 withdrawal will remove around 12,000 TEUs weekly from the FENorth Europe service, representing about 20 percent of Ocean 3’s capacity and four percent of the total capacity on the route,
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according to Alphaliner.
Apart from the cost of idling the selected vessels, the carriers also risk losing market share to their competitors, who stand to benefit from the cargo shifts away from O3.
The alliance may be forced to make the capacity cut permanent, as cargo volumes are unlikely to pick up in September to support the resumption of regular services.
According to Alphaliner figures, the SCFI spot rate from Shanghai to North Europe fell to an all-time low of $205 per-TEU on June 19, which is not even sufficient to cover bunkering.
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