Container lines look anew at Asian trades

Apparently in response to market demand, the end of 2017 and the first couple of weeks of the year have seen the launch of a flurry of new and enhanced services from several key lines on intra-Asia and China-Southeast and South Asia routes in particular.

A key theme that seems to be driving these changes is the recognition of the potential of these markets and the willingness to deploy relatively larger 8,000-9,000 teu vessels on the China-India services.

“Overall, the Intra-Asia market is expected to grow 5% in 2018. In particular, Southeast Asian countries are likely to see strong trade growth while trade between China and India is expected to rise in line with India’s economic development. APL will continue to access the needs of the market to offer compelling solutions and services,” said an APL spokesperson.

Partners in the Ocean Alliance, Orient Overseas Container Line (OOCL) and APL, were among the first to launch. The former’s Far East-Chennai service boosts service to the southeast of India from China while APL also announced revamps to its China-Subcontinent network.

“2017 saw APL offering 38 services as part of the Ocean Alliance; as well as introducing 14 new APL services and enhancing 14 existing loops,” said the spokesperson.

She added that the services were introduced to strengthen the line’s global network, in particular key transpacific and intra-Asia trade lanes, as well as enhance its presence in the Middle East and Indian subcontinents; and seek growth opportunities in Oceania and transatlantic.

The lines also clearly see potential in the Southeast Asia market, even though it is notoriously dynamic and tricky to make money in. Maersk’s Intra-Asia specialist line MCC Transport launched a direct China-Vietnam service in December, promising faster transit times and more direct service.

“Vietnam is China’s biggest trading partner in Southeast Asia, and trade between the two countries has been steadily growing over the recent years,” said MCC chief commercial officer Naresh Potty, in a press release. MCC declined to elaborate further on its thoughts about the Intra-Asia market.

Recognising the challenges APL said: “It is noteworthy that the Southeast Asia shipping network is constantly changing. In particular, the intra-Asia short sea market is fast moving with comparatively lower barriers to entry or exit compared to long haul trades.”

APL did however did also acknowledge the region’s potential. “Amongst the drivers of change include the expansion of trade between China and Southeast Asia, improvement in terminal facilities to accommodate larger vessels and the availability of tonnage,” said the spokesman.

In response, APL kicked off the year with the announcement of a new China Southeast Asia (CSE) service that has been introduced to meet this demand. “In 2018, more APL services will be introduced to serve market needs and further develop our service network,” she added.

Other intricacies of the Southeast Asian market in particular include the decision on the best size of vessel to use as well as dynamism in cabotage issues.

“For efficiency, APL deploys larger vessels for long haul services and smaller vessels for shortsea services in Asia,” the spokesman said, pointing out that its two China-India services use vessels with a nominal capacity between 8,500 and 9,300 teu.

“Optimally-sized for the route, we have been able to achieve economies of scale and a lower slot cost,” she noted.

Noting India’s strict cabotage rules and Malaysia’s recently liberalised domestic shipping market, APL said: “We are closely monitoring regulatory changes in all markets, including Malaysia where rules between East and West Malaysia were recently relaxed. Besides regulations, we will review our product lines for the respective markets, taking into account market size and commercial viability.”

On the Indian market she said: “Should India liberalise her cabotage market, it would be interesting to learn how carriers might start leveraging the market to serve as alternative relay hubs to other India ports where the line haul vessels are not calling.”

Notwithstanding, APL expected Subcontinent markets such as India “to continue its healthy growth and this augurs well for services that are introduced into the market”.

The spokesman added that “continual strong growth of the Northeast Asia-Southeast Asia corridor can be expected, given the increasing trade links between the two regions, as well as the healthy economic growth of countries in the Intra-Asia shortsea market”.

“These market conditions offer opportunities for APL to ride on for organic growth,” she concluded.

Posted 14 February 2018

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Vincent Wee

Asia Editor, Seatrade Maritime News

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