Asia to Northern Europe freight rate decline, 2M will reduce the number of stops on the route
As sea freight demand from China to Northern Europe continued to set records in June, 2M alliance members Maersk and Mediterranean Shipping have reduced the number of stops in Europe on future flights to avoid congestion.
The Danish shipping giant advised customers yesterday: "In view of the current supply chain bottlenecks across the network, we are taking steps to improve the reliability of our Far East Asia to Northern Europe network."
The move is aimed at improving schedule reliability for three services within the 2M network: AE6/Lion, AE7/Condor and AE55/Griffin.
The AE6/Lion route will eliminate Rotterdam port call (Rotterdam is one of the two ports in Antwerp) and add Le Havre port call on the 432W route operated by MSC Michel Cappellini.
AE7/Condor cancelled a port call to Le Havre on Maersk's Horsburgh 433E route. AE55 / Griffin will also eliminate stops in Le Havre, Colombo and Singapore, but will add Hong Kong and Salt Field, where MSC Vandya 432W and MSC Amsterdam 431E will stop, and Colombo cargo will be transshipped from Hong Kong.
MSC, which is based in Switzerland, said: "The updated network is designed to improve our services, provide new port pairs and adapt to the ongoing challenges of port congestion in Europe, while continuing to provide competitive transit times for freight between Asia and northern Europe."
Figures from Xeneta and Container Trade Statistics this week showed that 800,000 TEUs of containers were shipped from China to Northern Europe in June, a monthly record for such trade.
"Shippers assessed the impact of the Red Sea conflict on Marine supply chains and were not prepared to risk a repeat of the chaos seen during the pandemic years," explained Peter Sand, principal analyst at Xeneta.
But he noted that the desire to protect the supply chain "comes at a high cost to shippers."
In fact, June's record trade volumes coincide with a spiral in average spot freight rates for Far East-Northern Europe trade: Xeneta data shows that spot freight rates rose 166% between April 30 and July 1.
"Shippers in a rush to import may have spent far more money than they expected, but they clearly feel this is a price worth paying to reduce the level of risk in the supply chain later in the year," Sander added.
But Xeneta pointed to signs that demand for container traffic from China to northern Europe may have peaked.
"There is a clear correlation between the record volumes of major trade from China to North America and Northern Europe and the development of the spot market," Mr Sander said.
Average spot freight rates from the Far East to Northern Europe have fallen by 1.6% since July 31.
Sander commented: "If we see spot prices weakening now, that would indicate that we have seen a peak in demand for ocean container shipping, and volumes should be lower in July and August, which is usually the peak season."
However, Chris Higgins, commercial director at AFS Global, said: "As we approach the first winter of using this route around the Cape, combined with still reduced capacity and misaligned equipment, we don't think freight rates will fall as fast as they will rise.
"Demand is likely to return to sustainable levels, but due to the Golden Week (in October), winter weather and the early arrival of the Lunar New Year in 2025, we think the challenge remains on the supply side and may cause importers to overorder to ensure there is no shortage of supply."
The Danish shipping giant advised customers yesterday: "In view of the current supply chain bottlenecks across the network, we are taking steps to improve the reliability of our Far East Asia to Northern Europe network."
The move is aimed at improving schedule reliability for three services within the 2M network: AE6/Lion, AE7/Condor and AE55/Griffin.
The AE6/Lion route will eliminate Rotterdam port call (Rotterdam is one of the two ports in Antwerp) and add Le Havre port call on the 432W route operated by MSC Michel Cappellini.
AE7/Condor cancelled a port call to Le Havre on Maersk's Horsburgh 433E route. AE55 / Griffin will also eliminate stops in Le Havre, Colombo and Singapore, but will add Hong Kong and Salt Field, where MSC Vandya 432W and MSC Amsterdam 431E will stop, and Colombo cargo will be transshipped from Hong Kong.
MSC, which is based in Switzerland, said: "The updated network is designed to improve our services, provide new port pairs and adapt to the ongoing challenges of port congestion in Europe, while continuing to provide competitive transit times for freight between Asia and northern Europe."
Figures from Xeneta and Container Trade Statistics this week showed that 800,000 TEUs of containers were shipped from China to Northern Europe in June, a monthly record for such trade.
"Shippers assessed the impact of the Red Sea conflict on Marine supply chains and were not prepared to risk a repeat of the chaos seen during the pandemic years," explained Peter Sand, principal analyst at Xeneta.
But he noted that the desire to protect the supply chain "comes at a high cost to shippers."
In fact, June's record trade volumes coincide with a spiral in average spot freight rates for Far East-Northern Europe trade: Xeneta data shows that spot freight rates rose 166% between April 30 and July 1.
"Shippers in a rush to import may have spent far more money than they expected, but they clearly feel this is a price worth paying to reduce the level of risk in the supply chain later in the year," Sander added.
But Xeneta pointed to signs that demand for container traffic from China to northern Europe may have peaked.
"There is a clear correlation between the record volumes of major trade from China to North America and Northern Europe and the development of the spot market," Mr Sander said.
Average spot freight rates from the Far East to Northern Europe have fallen by 1.6% since July 31.
Sander commented: "If we see spot prices weakening now, that would indicate that we have seen a peak in demand for ocean container shipping, and volumes should be lower in July and August, which is usually the peak season."
However, Chris Higgins, commercial director at AFS Global, said: "As we approach the first winter of using this route around the Cape, combined with still reduced capacity and misaligned equipment, we don't think freight rates will fall as fast as they will rise.
"Demand is likely to return to sustainable levels, but due to the Golden Week (in October), winter weather and the early arrival of the Lunar New Year in 2025, we think the challenge remains on the supply side and may cause importers to overorder to ensure there is no shortage of supply."
