MSC and the Ocean and Premier container shipping alliances are withdrawing some transpacific and Asia-Europe services in a bid to to stem falling freight rates, according to consultancy Linerlytica’s report this week.
MSC’s hapless transpacific Mustang service, which was supposed to have been reintroduced last July but was delayed by bottlenecks in Singapore, will not materialise at all, with its intended vessels moved to other lanes.
The Ocean Alliance has delayed this month’s Asia-North Europe string (NEU3) launch, and the Premier Alliance is likely to hold two transpacific strings scheduled to start in May.
But Linerlytica believes these capacity cuts won’t halt the downward pressure on freight rates.
It said: “Although the Shanghai Containerised Freight Index showed that, on 28 February, Shanghai-North Europe freight rates gained 7% on the previous week, to $1,693/teu, there is no support from cargo volumes.
“Carriers’ half-hearted efforts to cut capacity on the Asia-North Europe route are doing little to support freight rates, as the planned 1 March rate hikes have fallen flat amid aggressive rate discounts. Although the SCFI rates to North Europe rose by 7.3% at the end of last week, actual rates are still facing downward pressure, as demand is still not keeping pace with the supply on the trade.”
Linerlytica added that MSC’s move to redirect its 24,000 teu ships from Asia-North Europe to Asia-Mediterranean and West Africa routes, as well as suspending the NEU3, would not help, as weekly capacity for April departures was still hovering at 300,000 teu.
Transpacific spot rates are still dropping, and the Shanghai-US West Coast rate fell below $2,500/40ft for the first time since January 2024. Yesterday, Freightos’ Baltic Index showed rates on this lane at $2,405/40t, the lowest since December 2023.
Linerlytica said: “Although MSC has confirmed the withdrawal of the Mustang service to the Pacific North-west, it has no impact on immediate capacity on the trade as MSC had already blanked the initial four sailings in February.
“Rate hike plans have already been delayed to the second half of the month, but even that is unlikely to be pushed through under the current uncertain climate, with the additional 10% tariffs on Chinese imports to the US keeping transpacific volumes very muted.”
