Fewer Vessels on the Asia to Europe Route

Lower growth in China and a poor Eurozone economy has caused many major shipping lines to slash the number of sailings on the world’s busiest route between Asia and Europe. The peak season for container shipping is normally late summer as retailers gear up for the holiday season. A combination of lower demand, and large supply of vessels on the water is proving to be difficult for the ocean industry.

In August, the world’s biggest alliance, Maersk Line and Mediterranean Shipping Company, announced it would withdraw approximately 6,500 containers which is roughly 10% of its capacity, from the route. More recently, the G6 Alliance, APL, Hyundai Merchant Marine, Mitsui OSK, NYK, Hapag Lloyd, and OOCL all said that starting in September they will cut at least 12 round trip sailings from Asia to Europe.

Global container capacity is expected to increase by 8.6% this year with the addition of new ships, while demand is expected to increase between 2-3%. This has put a lot of pressure on freight rates, and given shipping lines little choice but to reduce sailings as a way to stoke demand. Many executive and industry insiders to not see the situation improving anytime within the next few years, unless the economy drastically improves.

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