Significant Changes in India-North America Trade Lane: New Services and Network Realignments

The India-North America trade lane, recognized by analysts for its long-term potential amid trade diversification in Asia, is on the brink of significant changes in its ocean network. Hapag-Lloyd is set to withdraw from the Indamex service, a joint operation with CMA CGM that has led the market between West India and the US East Coast. This move marks the end of a long-standing partnership and a shift towards new standalone services and realignments in the trade lane.

Hapag-Lloyd will introduce a new standalone service on this route, known as the TPI, beginning in early August. This new service will connect Port Qasim (Pakistan), Nhava Sheva and Mundra (India), and then move on to New York, Norfolk, Savannah, and Charleston before returning to Port Qasim. The first TPI vessel, the Torrente, is scheduled to arrive at Port Qasim on August 8 and New York on September 11.

As part of this network realignment, the Indamex 2 service has already canceled several sailings for India calls, and additional blank sailings are planned. Concurrently, CMA CGM is launching a revamped India-USEC routing, consolidating the two Indamex strings into a single loop that includes additional stops at Savannah and Charleston. This new Indamex service will complete a 77-day round trip via the Cape of Good Hope, starting with the APL Southampton departing from Port Qasim on August 15.

Industry sources suggest that Cosco Shipping and its subsidiary OOCL may become vessel-sharing partners for CMA CGM’s rebranded loop, reflecting the anticipated growth and service expansions in the India-USEC market. Hapag-Lloyd, the primary vessel provider for Indamex 2, has historically led with seven ships, indicating a significant shift in vessel allocation and partnership dynamics.

The changes in the India-USEC network follow Ocean Network Express (ONE) injecting additional capacity into the trade lane with its standalone WIN service. Indian containerized exports to the US are estimated at approximately 1.5 million TEUs annually, with the US East Coast receiving just under 83,000 TEUs in May 2024, according to PIERS, a sister product of the Journal of Commerce within S&P Global.

These developments coincide with broader strategic adjustments in the industry, such as the proposed Gemini Cooperation alliance between Maersk and Hapag-Lloyd, set to offer more integrated services across markets starting early next year. The evolving service arrangements are a response to disruptions in global maritime routes, particularly those caused by the ongoing Red Sea crisis.

Since December 2023, Iranian-backed Houthi attacks on shipping in the Red Sea and Gulf of Aden have necessitated vessel diversions around the Cape of Good Hope, extending shipping routes and causing significant industry disruptions. Maersk CEO Vincent Clerc emphasized the challenges ahead, noting the strain on logistics and supply chains as vessels navigate these extended routes.

Clerc highlighted the need for collaboration in addressing these challenges, with Maersk implementing key investments and operational adjustments to mitigate disruptions. Despite these efforts, the industry continues to face tight capacity and significant delays, particularly on routes from Asia, where export demand remains strong.

The disruptions have led to congestion in Southeast Asian hubs and equipment shortages, further complicating supply chain efficiencies. Maersk is striving to balance the demand for export containers from China with the need to manage limited vessel capacity, a decision that impacts shipping costs and global supply chain operations.

Overall, the India-North America trade lane is undergoing substantial changes in response to both market demands and geopolitical disruptions. These adjustments reflect the industry’s resilience and adaptability, ensuring continued service and capacity for global trade despite ongoing challenges.