Maersk Line sent another shot across the liner carrier industry's bow on Monday with the pending introduction of its Daily Maersk product, which will provide shippers daily cutoffs in four key Asian origin ports connecting to three key northern European ports from the end of the October.
The announcement was as audacious as it was ambitious, with Maersk Line Chief Executive Eivind Kolding postulating that it would be virtually impossible for any of its competitors to provide a matching service, at least initially, because of a lack of vessels.
Using information from the database of American Shipper
affiliate ComPair Data
, it's clear to see why Kolding has such confidence. Maersk said Monday it plans to roll 70 vessels into the Daily Maersk product. That's precisely the number of vessels ComPair Data
currently shows Maersk has deployed on seven Asia/Europe services calling at the four Asian ports -- Shanghai, Ningbo, Yantian and Tanjung Pelepas. Only one of those services is jointly operated with a partner outside the A.P. Moller - Maersk Group -- the AE8 service, on which Maersk currently provides five of 10 vessels, with CMA CGM providing the other five.
Kolding said the new product won't add any capacity to the trade. It appears from ComPair Data
figures to be more a reorganization of existing assets deployed by the line. The 70-ship number is important because a typical 10-ship Asia/Europe string has a 70-day round-trip rotation. So theoretically, a vessel departing from Shanghai on day one will return to Shanghai on day 71, a day after the 70th vessel has made its departure from Shanghai.
So if 70 is the key number, how do Maersk's major competitors stack up in terms of vessels deployed on that trade?
Mediterranean Shipping Co. is the world’s second-biggest line after Maersk, but it has only 22 vessels connecting those four major ports (substituting Singapore for Tanjung Pelepas) with the three destination ports in Europe.
CMA CGM, the world’s third-biggest line, has 27 ships deployed on four services (including the five from the AE8/FAL5 service it runs with Maersk).
Evergreen Line has 15 ships on two services (one of which is a jointly operated with China Shipping and Zim).
It drops off significantly after those three. The next biggest operators of capacity on the trade are the three major carrier alliances -- the CKYH, Grand and New World alliances. Yet those three alliances collectively deploy 49 ships on services calling the key Asian ports and linking to the trio of northern European ports. OOCL, for instance, has 16 ships deployed on the Grand Alliance's two services connecting the those ports, but instituting such a product across multiple carriers within an alliance would likely prove more difficult than a single line able to control its own destiny.
Looking forward, MSC has 45 vessels on order, with an average size of 10,600 TEUs, according to the maritime consultant Alphaliner, while CMA CGM has 15 more ships to come, at an average size of 9,750 TEUs. Certainly many of those vessels would be deployed on the Asia/Europe trade, as would a host of 10,000-TEU and larger ships ordered by other top 20 carriers. But Maersk has its own 56-ship order book, with an average size of 10,081 TEUs. And even if MSC deployed all of its ordered vessels on the Asia/northern Europe trade, and kept all existing vessels in the trade, it would still have less than the 70 ships Maersk operates there today.
Since Kolding stated Daily Maersk will only be provided through capacity on its own vessels, American Shipper
only considered own-operated vessels for the purposes of this examination (CMA CGM, for instance, charters space on a handful of other services on the Asia/northern Europe trade, but that capacity wasn't considered).
Maersk will essentially offer an average ship in excess of 10,700 TEUs capacity in the four Asian origin ports every day of the week from Oct. 24. Capacity allocations mean not all that capacity will be on offer at any one of the four ports, or even all four collectively. But the ability to offer a 10,000-TEU-plus ship every single day is something no other line can hope to match. To put this advantage further in perspective, only five other lines (MSC, CMA CGM, COSCO Container Lines, China Shipping, and UASC) have even a single 10,700-TEU vessel in their existing fleets.
Maersk's gambit appears to hinge on the idea that overcapacity on the trade will discourage other lines from even trying to match the daily cutoff concept.
In terms of the transit times on the trade, Maersk's offering seems very realistic. The line is promoting "transportation time" -- that is, the time from cutoff at origin to cargo availability at destination -- instead of transit time, saying transit time only counts the time that cargo is actually on the vessel, which is largely irrelevant to shippers. Maersk said shippers should add three to nine to days to advertised transit times to account for time a container spends in origin and destination terminals. If that's the case, Maersk's promised 34 days transportation time from Shanghai to Rotterdam would be very competitive, given pure transit times currently range from 27 to 39 days, according to ComPair Data
Daily Maersk is only the latest initiative introduced this year by the line since Kolding delivered a manifesto this summer, in which he boldly declared Maersk would improve its schedule reliability, simplicity for customers, and environmental impact. The line is rolling out a no-show penalty program in which it will charge shippers who book space but don't show, and in return it will pay a fee to shippers if their cargo is rolled. In March Maersk knocked the industry on its heels with an order for 20 18,000-TEU vessels, dwarfing previous containership orders.
Even if Monday's announcement largely represents a repackaging and streamlining of what Maersk offers at present, the promise of day-definite transportation times will surely have liner carriers executives around the world pondering what the market leader's next move will be. — Eric Johnson