Actions by some shipping lines to add vessel capacity onto the eastbound lane of the trans-Pacific trade to the U.S. West Coast may depress vessel utilization levels for the rest of the year, according to Drewry Shipping Consultants.
Even though eastbound trans-Pacific cargo demand declined by 8.8 percent in the first quarter from the fourth quarter of 2012, carriers kept vessel utilization levels relatively flat between Asia and the West Coast flat between October and March despite recent vessel upgrades by canceling some voyages. The average eastbound vessel utilization between January and February fell from 95 percent to 68 percent and then rose to an estimated 80 percent in March.
But carrier plans to cascade unwanted vessel capacity from the moribund Asia-Europe trade threaten to undo this. “Vessel upgrades will add more vinegar to the wound unless cargo growth takes off unexpectedly,” Drewry said in its weekly Container Insight.
Evergreen Line plans to bring back its CPS 2 service in May. China Shipping and UASC intend to introduce a new service in May between Nansha, Yantian, Xiamen, Los Angeles and Nansha. CMA CGM and Mediterranean Shipping Co. started upgrading the size of three ships on their Bohai Rim/New Orient Express to 11,000 20-foot-equivalent units in March and plan to replace another three ships with vessels of that size.
In addition, the CKYH Alliance is replacing the six ships in its PSX service with 10,000-TEU ships.
The new services by Evergreen and China Shipping/UASC alone will add around 3 percent of extra capacity (when Evergreen’s service becomes weekly) in each direction, and further new services are probable.
“Ocean carriers’ recent new service announcements therefore beggar belief, so most probably only indicate that the trans-Pacific trade lane is felt to be the better place to bury unwanted vessel capacity than the Asia-Europe route on the grounds that its prospects for growth are ‘not as bad,’ ” Drewry said.