Golden Week + maintain freight rates! MSC fires the first shot of suspension

It is only one month away from the Golden Week of October (after the holiday, the off-season will officially start), and the suspension of shipping companies is long overdue. MSC fired the first shot of suspending flights. On the 30th, MSC said that with weak demand, it will suspend its independently operated Asia-Northern Europe Swan loop for six consecutive weeks from the 37th week to the 42nd week starting in mid-October. At the same time, three voyages on the Asia-Mediterranean Dragon service (Asia-Mediterranean Dragon service) in the 39th, 40th and 41st weeks will be canceled consecutively.
Drewry recently predicted that in view of the continuous delivery of new vessel capacity and the weak peak season, ocean carriers may implement stricter suspension strategies to prevent further declines in freight rates, which may lead to temporary cancellation of voyages by shippers/BCOs. Just last week, MSC announced plans to rotate its Swan schedule, which included an additional call at Felixstowe in northern Europe, but also canceled some Asian port rotations. The adjusted voyage of week 36 of the Swan service will still depart from Ningbo, China on September 7th with the 4931TEU “MSC Mirella”. Swan Loop was relaunched in June this year as a separate service from the 2M alliance. However, MSC has struggled to justify the extra capacity and has reduced the size of ships deployed from around 15,000 TEU to a maximum of 6,700 TEU.
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Consulting firm Alphaliner said: “Weak cargo demand in July and August forced MSC to deploy smaller vessels and cancel voyages. The last three voyages of the month, the 14,036 TEU “MSC Deila”, were all cancelled, and the ship this week Has been redeployed on the Far East-Middle East New Falcon circuit.” Perhaps even more surprising, given the industry’s resilience thus far, MSC has decided to cancel three sailings in a row on its standalone Asia-Mediterranean Dragon circuit due to weak demand. After weeks of creating stronger bookings and consequently higher spot rates on the Asia-North Europe route, the commitment of extra capacity on the route appears to be having a negative impact. In fact, the latest Ningbo Container Freight Index (NCFI) commentary stated that the Northern Europe and Mediterranean routes “continue to cut prices to win more bookings”, leading to a drop in spot rates on these two routes.
Meanwhile, consulting firm Sea-Intelligence believes shipping lines are too slow to adjust capacity ahead of China’s National Day holiday. CEO Alan Murphy said: “There are only five weeks until Golden Week, and if shipping companies want to announce more suspensions, then there is not much time left.” According to Sea-Intelligence data, taking the trans-Pacific route as an example, Total capacity cuts on trade lanes during Golden Week (Golden Week plus the next three weeks) are now just 3%, compared to an average of 10% between 2017 and 2019. Murphy said: “Furthermore, with tepid peak season demand, it can be argued that blank voyages required to keep market rates stable will have to exceed 2017 to 2019 levels, which will give carriers a breakout strategy in October. bring further pressure.”
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Post time: Sep-04-2023