Maersk takes knife to Asia-Europe service network

10/16/2012

Soft demand in the Asia-Europe trade has led the route’s leading operator to take more capacity out, with one string being terminated and another suspended until early December.

“We expect a 3% slump on the Asia-Europe container trades for 2012, so there is currently no need for the number of ships sailing,” said Vincent Clerc, chief trade and marketing officer for Maersk Line (pictured). 

“We are taking steps to adjust to this without reducing our market position.”

Clearly, trading conditions have worsened and particularly on the eastern Mediterranean sector. According to Container Trades Statistics (CTS) latest data, European imports of containerised goods from Asia fell 10.8% year on year in August. This followed a more than 13% slide in July.

The declines reported in the Mediterranean sector were even more severe, with reductions of more than 20% in some corridors.

Clerc said that the latest decision, which follows a general cut back in capacity in February and a series of schedule changes and vessel withdrawals in August – designed to cover weaknesses in the trade over October’s Golden Week holiday in China – would reduce Maersk’s slot supply by another 12% or so.

“They bring our total capacity reduction in 2012 on the Asia-Europe network to 21%,” he said.

Clerc stressed that the capacity cuts would have no impact on the carrier’s all-important Daily Maersk service offering, which has seen its share of the carrier’s liftings on the trade rise significantly over the past 12 months.

The latest plan involves Maersk terminating its AE5 (Asia-Turkey) service and suspending its AE9 loop until early December.

The AE5 service, which uses eight 6,500teu vessels and is operated in conjunction with CMA CGM, calls at Shanghai, Nansha, Yantian, Port Tanjung Pelepas (PTP), Jeddah, Port Said, Izmire, Istanbul (Ambarli), Port Said, Xiamen, Ningbo and return to Shanghai. It will perform its last sailing out of PTP on 8 November.

According to Maersk, some of the ships displaced from this service will be cascaded into the carrier’s ME2 service, while others will be idled. The company expects at least 12 6,500teu ships to be idle in Q4 12.

The AE9 service has 11 8,000teu vessels, and the plan is to reintroduce these ships when the service is resumed in early December.

Nonetheless, a company statement stressed: “Where commercially appropriate, Maersk will consider additional opportunities to reduce capacity and look for slow-steaming opportunities.”

Therefore, it looks as if the misery in this trade is set to continue. Maersk would not comment on the trade’s likely performance in 2013 and its deployment programme for it. 

However, management at the carrier has stressed in recent weeks the need to return Maersk’ liner business to profitability. Given current market conditions, it will be all about managing supply.