G6 shipping alliance follows O3 in Asia-Europe rate war
The Ocean Three (O3) alliance’s decision to cut services on the key Asia-Europe trade appears to have started a knock-on trend, with the G6 alliance of container lines following suit.
The G6 alliance (formed by APL, Hapag-Lloyd, Hyundai Merchant Marine, Mitsui O.S.K Lines, Nippon Yusen Kaisha and OOCL) has confirmed that it is reducing capacity and removing container ships from the Asia-Europe trade, but did not specify what capacity was being withdrawn.
The alliance members have, however, confirmed that four Asia-Europe sailings will be ‘voided’ in response to changes in market demand. The void sailings are planned for the following services and weeks:
- Loop 6 service in week 31 (westbound ETA Kaohsiung 31st of July 2015). The westbound Kaohsiung call and the eastbound Jebel Ali call will be added into Loop 7 in the respective week. The westbound Colombo and Nansha calls will be added into Loop 4 and the Fuzhou call will be added into Loop 5.
- Loop 7 service in week 32 (westbound ETA Qingdao 3rd of August 2015). The westbound Qingdao call will be added into Loop 4 in the respective week, with the newly added Gdansk call being covered by the Loop 5 in the respective week.
- Loop 4 service in week 33 (westbound ETA Ningbo 14th of August 2015). The westbound Le Havre call will be added into Loop 6 in the respective week.
- Loop 5 service in week 34 (westbound ETA Kwangyang 21st of August 2015). The westbound Kwangyang and Pusan calls will be added into Loop 6 in the respective week.
This comes after O3 announced it was withdrawing 4% of capacity from the service. The O3 alliance, comprised of CMA CGM, CSCL and UASC, is a key competitor to the G6, leading Paris-based analyst Alphaliner to call them the “first to blink” in the current freight rate war.
All shipping lines globally are suffering from feeble demand and collapsing rates on almost every major trade route, leading analyst agency Drewry to project in its Container Forecaster newsletter that carriers will struggle just to break even this this year.
Alphaliner supports this view, pointing out that the market that has fallen by 80% since January. However, both Alphaliner and Drewry have reported that the current reductions are not enough to prompt the general rate increase (GRI) that all four major shipping alliances are hoping to introduce.
According to Drewry, over capacity on the Asia-Europe service alone effectively means that more than 120 container ships of more than 8,000-teu are operating empty.
It now remains to be seen whether the leading shipping alliance, the M2 partnership between MSC and Maersk Line, will follow suit.