Ocean carriers are pulling capacity from Chinese export routes and redeploying the ships to more robust tradelanes with growth potential.
Moreover, the weakness in the Chinese market is prompting more discussions on carrier slot swap agreements between rival alliances.
“Poor cargo demand in China and falling ocean spot freight rates have led to significant changes in global fleet deployment,” said Alphaliner.
The consultant said according to its data, more than 565,000 teu of capacity was withdrawn from Asia-North America and Asia-Europe trades last year.
It noted the biggest tonnage shift in terms of capacity was to Middle East and India-related services, which saw a boost of 320,600 teu, or 11% of fleet capacity, added last year.
The highest percentage increase was seen on the transatlantic, which recorded a 16.2% increase in capacity with the addition of 162,300 slots, as the market remained resilient despite the demand downturns seen elsewhere.
Carriers do not expect the Chinese export market to recover anytime soon, and Japanese carrier ONE said yesterday, in its results outlook, that profitability was “expected to deteriorate”, due to a softening of demand.
It said the number of blanked sailings was “expected to increase due to the longer slack season around the Chinese New Year and the time it takes for cargo volumes to recover”.
ONE is now forecasting a net profit of $940m for the current quarter, compared with the $5bn+ profit it achieved in the same period of 2022, reflecting the sharp reversal in demand for cargo from China and consequent slump in freight rates.
It follows that carriers will look to optimise their fleets by deploying ships on more lucrative trades and make more extensive use of slot charters on the Asia-Europe and transpacific routes to cover their contract commitments.
And, with demand from China likely to stay weak, perhaps until the peak season, cross-alliance slot chartering could become increasingly common.
“Topping up the ship with a slot charter, even if it’s from another alliance, makes sense,” one carrier contact told The Loadstar. “It means more revenue in the voyage result, and that outranks any commercial concerns.”
Indeed, this month THE Alliance lead line Hapag-Lloyd commences a slot charter with Ocean Alliance lead line CMA CGM on the French carrier’s FAL3 loop from Asia to North Europe. This, it said, would “strengthen its coverage” and provide dedicated connections to North European ports.
At the same time, Hapag-Lloyd will terminate its standalone CGX China-Germany Express service, which it launched at the height of the demand boom.
Elsewhere, Alphaliner reports that CMA CGM and ONE have a filed an amendment to their transpacific slot exchange agreement to swap slots between the CMA CGM-operated Pearl River Express service and the Asia-US west coast leg of THE Alliance’s FP1 pendulum loop, which is operated by ONE.
The consultant noted that the latest slot charter agreement took the cross-alliance cooperation between the two carriers on the transpacific to six loops.