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The Loadstar reported last week that ocean carriers will withdrew around 8.8% of capacity on the Asia-Europe route over the next 12 weeks. CMA CGM announced it will blank five sailings in the period surrounding China’s Golden Week, removing close to 100,000 TEU from the Asia to Europe trades. In addition, the 2M Alliance will pull 10% of its capacity on the trade between now and the Chinese holiday, blanking seven sailings, while THE Alliance pulls 18%, blanking 10.

According to The Loadstar, the reduced freight capacity from Asia Europe could be explained by the reduced demand during the peak season this year which has likely driven the lines to reduce capacity as they look for ways to maintain rates that have recently “collapsed”, particularly on Asia-Europe routes. Mike Wackett added: “(…) The demand outlook is very poor going into the fourth quarter. I think the carriers will adopt the same radical approach as they did at the start of the pandemic and take out a huge amount of capacity to protect and, as it proved then, boost their rates.”

The blank sailings announcements must be put in parallel with the record-high earnings of ocean carriers: According to an analysis by Blue Alpha Capital founder John McCown and reported by the Loadstar, the industry produced a cumulative net profit of $59.3bn in the first quarter, after a surplus of $52.5bn in the final period of 2021. And ocean carrier results for Q2 have all shown a quarter-on-quarter improvement, with, for example, Maersk posting a profit of $8.6bn, compared with $6.8bn in Q1. Therefore, favouring very high rates by reducing capacity over European connectivity will be detrimental for carriers’ customers, considering that their service quality has shown no signs of improvement since the start of the pandemic.

Source: The Loadstar