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Damage limitation

The decision of 2M carriers Maersk Line and MSC to suspend the ULCV-deployed AE2 Asia-North Europe service won’t raise freight rates, but should temper the decline in the slow demand months ahead.

This is an extract from the upcoming Container Forecaster to be published at the end of September.

It has been a tough year for carriers plying their trade on the key Asia to North Europe corridor. The demand growth that has been evident elsewhere, such as in the Transpacific simply refuses to come. After seven months of the year westbound volumes from Asia to North Europe were down by 1% following lacklustre demand in the two key import markets of the UK and Germany.

The trade has had to endure rough years in the recent past; declining by 4% as recently as 2015, but the issue has been made more acute this year due to the heavy influx of new tonnage joining the trade. The upshot is that headhaul utilisation has fallen from an average of 91% last year to a meagre 84% up to the end of July (see Figure 1).

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Source: Drewry

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