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Maersk/MSC suspend transpacific service as rates fall, trade war looms

Maersk/MSC suspend transpacific service as rates fall, trade war looms
Maersk Line and MSC under the 2M alliance have suspended one of their joint transpacific services as the trade faces falling rates and the impact of a trade war between the US and China.

The EAGLE/TP-1 service has been suspended from 4 July sailing from Busan until further notice. The service calls Kaohsiung, Yantian, Xiamen, Shanghai, Busan, Vancouver, Seattle, Yokohama, Busan and Kaohsiung, and is one of five Asia – West Coast North America services operated by the alliance.

MSC said the suspension was due to the “challenging operating environment for business on the Transpacific trade”.

According to Alphaliner the service employs six vessels of 4,200 – 5,000 teu.

“The transpacific route is facing increasing pressure from surplus capacity and falling freight rates. Volume growth has slowed and the market outlook for the coming months has become increasingly uncertain, due to the Sino-US tariff war that is due to take effect from 6 July,” Alphaliner said in its weekly newsletter.

Of the major shipping sectors containers is expected to be the hardest hit by a US – China trade war.

“The announcement comes just six weeks after SM Line launched its 'PNS' loop on the same route - a further sign that rival carriers have successfully eroded the 2M carriers share in the transpacific market.

As other carriers have continued to grow capacity freight rates on the trade have come under pressure with the Shanghai Containerised Freight Index (SCFI) falling 19% for rates to the US West Coast since May to stand at $1,194 per feu as of 22 June with Alphaliner saying some carriers were reported to be offering rates of $1,000 per feu.

Operating conditions have been further worsened by rising fuel prices which have seen lines, including MSC and Maersk, imposing fuel surcharges across the board.

Read more: Maersk and CMA CGM join MSC in levying emergency bunker surcharges

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