Maersk U-turn on huge peak season surcharge

Maersk has taken a step back from original plans to implement one of the largest Asia-North Europe peak season surcharge (PSS) ever introduced, citing changes in volatile market conditions, and volume demands for the dramatic backtrack.

Maersk will continue with its existing Asia-North Europe PSS of US$250 per TEU and $500 per FEU and $500 per 40 ft hi cube beyond August 1. It had earlier announced it would implement a peak surcharge of $750 per TEU, $1,000 per FEU and $1,200 per 40 ft hi cube on July 15 but later pushed it back to August 1.

 
Maersk said it would continue with the current PSS and would give 15 days notice if it decided to implement the new PSS. The dramatic change has come about as the Asia-Europe market progresses through a volatile stage. Various exchange rate changes and China export tax exemptions have played a strong part in dictating volume throughput on the trade lane. Asia-Europe lines confirm that some four to six weeks ago, vessel capacity utilisation on the westbound Asia-North Europe trade was running at around 95 percent but this has now fallen to some 85 to 90 percent. Part of the reason behind the Maersk PSS announcement was centred on the container equipment situation, but now with the market in a slight reversal, equipment demand is not running as high as was previously expected, according to most Asia-Europe lines But this is a volatile trade, and there are signs once again that the market demand is on the upward swing, and capacity utilisation is also showing signs of picking up. Maersk is hence keeping its options open on the time frame of when exactly to implement the high PSS, but without doubt it will not be on August 1. The move has been echoed to a certain extent by Mediterranean Shipping Co (MSC), with confirmation that changing market conditions on the Asia-Europe trades have led to some lines rethinking the so-called equipment imbalance charge (EIC). MSC has postponed for a second time plans to implement such a charge for westbound cargo on the Asia-East Mediterranean and Black Sea trades. Instead of implementing an EIC of $200 per TEU on July 14, it has put back the charge to August 14. Earlier, MSC planned to implement the EIC on May 24t but decided to postpone the charge until mid-July Capacity has risen at double-digit levels in quarter-on-quarter capacity comparisons for the peak season build-up on most of the major East-West trades. The biggest increase has come on the Asia-Europe trade where weekly capacity has increased 13.1 percent to almost 230,000 TEUs in the third quarter, compared with the previous quarter, according to PR News Service. As has been expected, the latest addition to the Asia-North Europe trade has come courtesy of the split of the joint Grand Alliance and New World Alliance Loop D covering called China-Europe Express, which will, from August, operate as two separate loops. This will effectively add a further 6,500 TEU weekly capacity to the Asia-Europe trade. On the Asia-North Europe and Asia-Mediterranean trades, the biggest capacity increases through the third quarter is expected to come from MSC as the delivery of 14,000 TEU newbuildings gets underway. MSC operates two loops on each trade, and through the second half of this year is expected to take delivery of no less than 15 container vessels in the 12,000+ TEU category.

All 15 are expected to phase into the Asia-North Europe or Asia-Mediterranean trades in what will be a capacity cascading programme that will free up vessels around 9,000 TEU capacity, which in turn will be deployed on other MSC trades, including the transpacific and Asia-US East Coast via Suez trades. In addressing the peak season surge on the East-West trades, containership laid-up capacity has fallen from around two million TEUs at the beginning of the year, to just 350,000 TEUs as operators and owners bring tonnage out of mothballs. Most of the re-activated capacity is in the 4,000 to 6,000 TEU frame, and at the top end of that scale, APL has rapidly found itself with the ideal fleet of vessels for deployment on the new-look China- Europe Express. Analysts are predicting that the expected surge in market demand, particularly over Asia-Europe, may not be as high as expected, and that the extra capacity heading to this lane will do nothing more than push down rates.
(Source:www.cargonewsasia.com)