In the first quarter of 2018, capacity data illustrates the emphasis on growth in the transatlantic and Asia-Europe trades on a quarterly and year-over-year basis.
The Asia-Europe trade had witnessed a 4 percent climb between the fourth quarter of 2017 and the first quarter of 2018, as well as an overall increase of 9 percent since the close of the first quarter last year. However, capacity in the transatlantic trade had experienced the most significant gains, with a nearly 9 percent increase from the close of Q4 2017 to Q1 2018 and a 21 percent year-over-year boost.
Exactly one year after the massive restructuring of the alliances, the ocean shipping industry is set to experience another large-scale transition with the recent introduction of the Ocean Network Express (ONE), a container shipping joint venture between Japan’s three largest carriers: Nippon Yusen Kabushiki Kaisha (NYK Line), Mitsui O.S.K. Lines, Ltd. (MOL) and Kawasaki Kisen Kaisha, Ltd. (“K” Line). ONE officially set sail the first week of April 2018, taking the place of the aforementioned carriers within “THE” Alliance in the major east-west trades. THE Alliance also includes Hapag-Lloyd of Germany and Yang Ming of Taiwan.
Not to be outdone, the OCEAN Alliance, comprised of CMA CGM, APL, COSCO, Evergreen Line and Orient Overseas Container Line (OOCL), strengthened its service offerings in these trades, specifically in the transatlantic market, referring to it as its “Day Two Product,” while the 2M Alliance of Maersk Line and Mediterranean Shipping Co. (MSC) is set to revise several of its port rotations in the Asia-Europe/Mediterranean trade in May 2018.
Hyundai Merchant Marine (HMM), a slot-purchaser on various 2M Alliance services, became an outlier within the highly competitive Asia-Europe market with its standalone AEX loop, which commenced April 9. HMM is South Korea’s largest ocean carrier since Hanjin went bankrupt.
While the major east-west trades have gone through their own revisions, Maersk Line’s acquisition of Latin America specialist Hamburg Süd on Nov. 30, 2017, has brought about major revisions within the Asia-South American market. In compliance with strict conditions set by The Ministry of Commerce of the People’s Republic of China (MOFCOM), Maersk and Hamburg Süd were forbidden from entering into any vessel sharing agreements for a period of five years within the Asia-South America trade, while also having to pull out of their previous partnership with carriers on that lane. As a result, the Asia-South American network has been overhauled significantly, with altered vessel sharing agreements and port rotations.
According to the latest quarterly World Liner Supply Report from BlueWater Reporting, weekly deployed capacity from Asia to the West Coast of North America was fairly stationary during the quarter, decreasing 0.2 percent between the end of Q4 2017 to the end of Q1 2018, from 291,304 TEUs to 290,843 TEUs. Meanwhile, weekly deployed capacity from Asia to the East Coast of North America also took a slight downturn for the second straight quarter, decreasing 3.9 percent, from 124,014 TEUs at the end of Q4 2017 to 119,149 TEUs at the end of Q1 2018, after a 9.4 percent drop the previous period.
BlueWater Reporting tracks the weekly TEU capacity of competitive direct liner services on 30 individual lanes operating between Asia, Europe, and North and South America for the WLS Report, taking into account skipped sailings and slow steaming, and estimates the allocation of that capacity within each specific trade lane. BlueWater’s quarterly World Liner Supply Reports are designed to help ocean carriers, non-vessel-operating common carriers, freight forwarders, shippers, ports and analysts monitor trends in ocean liner shipping capacity.
Zooming in on the eastbound transpacific trade lane (Asia to ECNA and WCNA), weekly deployed capacity slipped 1.3 percent between the end of Q4 2017 and the close of Q1 2018, from 415,318 TEUs to 409,992 TEUs. Still the frontrunner, member carriers of the OCEAN Alliance saw their overall market share on the eastbound transpacific trade remain steady, shifting from 37.68 percent to 37.66 percent quarter-over-quarter, with weekly deployment dipping 1.4 percent, from 156,498 TEUs to 154,386 TEUs. Meanwhile, THE Alliance carriers’ combined market share inched up from 27.61 percent at the close of Q4 2017 to 27.97 percent at the end of Q1 2018, while weekly deployed capacity remained nearly unchanged, shifting from 114,669 TEUs to 114,656 TEUs. The 2M Alliance also experienced a modest uptick in market share on the trade, rising from 18.71 percent at the close of Q4 2017 to 18.85 percent at the end of Q1 2018, while weekly deployed capacity slipped from 77,709 TEUs to 77,286 TEUs. However, non-alliance affiliated carriers saw their market share on the trade fall from 16 percent to 15.53 percent quarter-over-quarter, while weekly deployed capacity declined from 66,442 TEUs to 63,664 TEUs.
After experiencing a 2.1 percent drop in Q4 2017, the highly competitive Asia to North Europe trade saw overall weekly deployed capacity rebound from 227,841 TEUs at the close of Q4 2017 to 237,820 TEUs at the end of Q1 0218. Market share for the 2M Alliance took the lead once again at 36 percent, with the OCEAN Alliance close behind at 34.70 percent and THE Alliance at 26.15 percent. Non-alliance carriers increased their involvement in the westbound Asia-North Europe trade, with market share climbing from 1.91 percent at the end of Q4 2017 to 3.2 percent at the end of Q1 2018. Total deployment for non-alliance carriers rose from 4,357 TEUs to 7,496 TEUs, a drastic 72 percent increase.
On the transatlantic trade, weekly deployed capacity surged 8.5 percent between the end of Q4 2017 and the close of Q1 2018, from 76,400 TEUs to 82,912 TEUs. First-quarter weekly deployed capacity on the trade displayed a 21 percent increase compared with the end of Q1 2017, when weekly deployed capacity stood at 68,768 TEUs. THE Alliance members continued to maintain the top spot on the trade, with a slight quarter-over-quarter increase in weekly deployed capacity, rising from 21,379 TEUs to 22,073 TEUs, despite market share dipping from 27.98 percent to 26.62 percent. Non-alliance affiliated carriers continue to make up a large portion of the market share on the trade, although their share decreased slightly, from 28.69 percent at the close of Q4 2017 to 27.76 percent at the end of Q1 2018. Total weekly deployed capacity for non-alliance carriers rose from 21,919 TEUs to 23,016 TEUs. The 2M Alliance saw weekly deployed capacity modestly increase from 18,805 TEUs at the end of Q4 2017 to 19,241 TEUs at the close of Q1 2018, while market share dipped from 24.61 percent to 23.21 percent. The OCEAN Alliance members experienced a large increase in weekly deployed capacity between the close of Q4 2017 and the end of Q1 2018, soaring 32 percent from 14,297 TEUs to 18,582 TEUs, while market share rose from 18.71 percent to 22.41 percent.
The 2018 First Quarter World Liner Supply Report is downloadable in Excel spreadsheet form here. You must be a BlueWater Reporting subscriber to download the World Liner Supply Report. The report also may be purchased directly for $500.