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Asia-North Europe trade capacity estimated to grow marginally in 2015

A recent SeaIntel Sunday Spotlight has estimated the capacity growth in the Asia-North Europe trade for 2015 as a consequence of the phase-in of new 10,000+ TEU tonnage. It was found that unless the carriers cancel services or increase the use of blank sailings as a tool to control supply, capacity next year should be expected to grow 6 per cent, but could go as high as 9.5 per cent if the less capacity seen over the year is blanked. In Q4 2015, the growth in capacity, compared to Q4 2014, is expected to be no less than 7.2 per cent unless the carriers take action to control the capacity increase, and could be as high as 15 per cent year-on-year (yoy) if the carriers stop blanking sailings.

Capacity in the Asia-North Europe trade is estimated to increase by 6 per cent yoy in 2015, if one assumes the 2M carriers will close the current AE6 service and the same amount of capacity will be blanked in 2015 as seen over the last year. It has been assumed that the 2M carriers will close the current AE6 service as they have announced that they will have six Asia-North Europe services, while MSC and Maersk Line combined currently have seven. It is assumed that it is the current AE6 service that will be closed, as the average vessel size is currently 6,200 TEUs and the largest vessels deployed are 9,000 TEUs.

In the rest of 2014 and throughout 2015, around 69 vessels with capacity in excess of 10,000 TEUs are scheduled to be delivered to the carriers, with CSCL’s new 19,000-TEU vessels as the largest ones. According to SeaIntel’s analysis, it should be expected that most of these vessels will be phased into the Asia-North Europe services next year, replacing smaller vessels, which again will replace even smaller tonnage on either Asia-Europe services or elsewhere.

According to SeaIntel, average weekly capacity will increase from 246,000 TEUs in 2014 to 270,000 TEUs in 2015 if it is assumed that the carriers will blank capacity to the same extent as this year.

COO and Partner in SeaIntel, Mr Alan Murphy, comments: "This "hidden" capacity growth equals that of 1.2 extra average-sized Asia-North Europe services launched from the start of 2015". If demand in this trade increases 1 per cent in 2015, 0.9 average-sized services would have to be pulled in order to keep the current supply-demand balance, and if demand increases by 4 per cent, only 0.4 average sized-services would have to be cancelled.

The capacity increase is, however, not flat over the full year, as newbuildings will be delivered throughout the year, and, therefore, SeaIntel expects capacity in Q4 2015 to grow by 7.2 per cent compared to Q4 2014, unless carriers take action to reduce capacity, or divert their newest and largest vessels to other trades, where they will not be as efficient.

These "modest" increases are, however, only applicable if one assumes the carriers will blank the same amount of capacity as seen over the past year. If the carriers stop blanking sailings, especially around Chinese New Year and Chinese Golden Week, the weekly capacity should be expected to grow by 9.5 per cent yoy, and in Q4 2015 the increase could be as high as 15.4 per cent yoy. Says Mr Murphy: "If the carriers want to keep the current supply-demand balance, we should expect to see them cancel an average-sized service in Q3 or Q4 in 2015, besides the cancelling of one of the 2M carriers’ current services, or we should see the carriers blank sailings to a much larger degree than we have seen over the last year".

Source: Exim News Service: London, Dec. 3

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