The liner carriers China Shipping, UASC, and CMA CGM took a bold step into the unknown last week.
The lines announced
they will deploy ships of between 12,500 and 14,000 TEUs on a loop between the Far East and Middle East, in effect merging two similar existing services operated with smaller ships into one.
When the loop starts in early February, it will be the first service operated with ships of that size to not touch European ports. In essence, it will be a litmus test for whether mega-containerships can be effectively run on services outside the Asia-Europe lane.
CMA CGM told American Shipper
it can work, saying the deployment “shows that mega-vessels can be operated in other trades than Asia–Europe."
The injection of such massive vessels into the Far East-Middle East trade shows two things: that lines see this previously secondary trade as having high-growth potential; and second, that this could be a place to stash the wave of mega-vessels that are threatening to overwhelm the Asia-Europe trade.
The deployment of these vessels essentially brings the slot cost war on Asia-Europe to a new frontier. And if the three lines are early movers on that trend, then they’ll have some big advantages if successful.
To properly understand just how much larger these ships will be than the current average on the Far East-Middle East trade, American Shipper
poured through the liner service database of its affiliate ComPair Data
. Excluded from the examination were services that sail beyond the scope of pure Far East-Middle East loops. That excludes mega-ship Asia-Europe or round-the-world services that include Asia-Middle East legs.
Aside from the two services that will merge into the combined China Shipping/UASC/CMA CGM loop in early February, there are 14 other pure Far East-Middle East services currently offered.
They are (with average vessel size in parentheses):
- APL-CMA CGM REX service - six ships (3,504 TEUs).
- TS Lines CME service - four ships (2,642 TEUs).
- Gold Star/TS Lines/PO Shipping AGS service - six ships (3,152 TEUs).
- PIL RS2 service - five ships (2,636 TEUs).
- CSAV Norasia Super Galex service - seven ships (4,329 TEUs).
- COSCO/OOCL MEX-MAX service - six vessels (8,397 TEUs).
- Hanjin/NYK FMX service - six vessels (6,628 TEUs).
- New World Alliance WAX/CMI service - seven vessels (6,325 TEUs).
- Hyundai KMS service - six vessels (5,622 TEUs).
- Evergreen APG service - six vessels (5,500 TEUs).
- Evergreen/COSCO FRS/FRX service - eight vessels (3,926 TEUs).
- Wan Hai/”K” Line/PIL CMS/CSG service - six vessels (5,975 TEUs).
- Yang Ming CGX service - six vessels (5,681 TEUs).
- Yang Ming/Hanjin/”K” Line/CSCL RES service - seven vessels (3,681 TEUs).
Note that in the above list, only vessel operators (and not slot buyers) were named.
The average vessel size for the 86 ships deployed on these 14 services is 4,857 TEUs. The largest ships deployed on the trade at present (aside from the 8,400-TEU ships on the China Shipping/CMA CGM AMA/CIMEX service that will be merged with UASC’s service) are those from COSCO and OOCL’s MEX-MAX service. But those ships will hardly be two-thirds the size of the average ships on the merged China Shipping/UASC/CMA CGM service.
The vast proportion of ships currently operating on strict Far East-Middle East loops are in the 5,000-TEU range. The biggest ships on the three lines’ new merged service will be nearly three times that size.
If slot cost reductions are the goal, the lines stand to win big. So two questions inevitably follow. Will other lines follow suit? And will ships of this size start to emerge on other secondary trades?
On the first question, the immediate answer is probably no. The carriers that already have ships of 12,500 TEUs or larger in their fleets have plans to deploy them within their Asia-Europe networks, where the slot cost war is truly underway. It’s notable, for instance, that CMA CGM is providing only one of its mega-vessels for this Asia-Middle East service, preserving the rest for its new Asia-Europe vessel sharing agreement with Mediterranean Shipping Co.
Maersk Line serves the trade via its Asia-Europe network, while MSC does it via an Asia-U.S. East Coast Suez service. Asia-Middle East is clearly home turf for Asia-based carriers, but few of them have the large ships to immediately measure up to this new service.
On the second question, the answer is maybe. Shifting 14,000-TEU vessels into a secondary trade signals that lines are actively looking at ways to deploy these ships in trades other than Asia-Europe. But these ships have certain needs. They need to call at deep ports with modern handling capabilities. And they need a high degree of demand, either direct at the ports they call, or via transshipment into cross-trades.
Lines can feed Africa and even South America from the Middle East ports, which are predominantly new and efficient by global standards. The same can’t be said for terminals in places like South America or India, where draft restrictions and container handling efficiency affects the size of ships that can call in all but a few ports.
As for the transpacific, carriers might like to shift 12,500-TEU ships into that trade – an express China-U.S. West Coast service is pretty uncomplicated operationally, relative to other trades. But with all the service factions operating in the transpacific (it is far more fragmented, market share-wise, than Asia-Europe) is the demand there? What’s more, can U.S. container terminals feasibly unload such large ships as quickly as their counterpart terminals do in Asia, Europe, or the Middle East?
For now, the China Shipping/UASC/CMA CGM big-ship Far East-Middle East loop is an experiment. For the sake of the whole liner shipping industry, here’s hoping it’s successful. — Eric Johnson