Maersk and MSC to Disband 2M Alliance, Industry Experts Take Stock

The two largest global container lines have mutually agreed to end their vessel-sharing partnership in January 2025. A joint statement by Vincent Clerc, CEO of A. P. Moller – Maersk, and Soren Toft, CEO of MSC, said that discontinuing the vessel-sharing alliance would allow both companies to “pursue their individual strategies”.

Consultant Drewry observed that decoupling the 2M alliance agreement could leave Maersk in “a tight spot” because “it is too big to join an existing alliance and too small to go it alone”. However, while MSC has size in its favor, there is a risk. Drewry warned that to fill its ships, MSC could return to its old market share/low-cost model, destabilizing the market.

Maersk has suggested it will seek out vessel-sharing agreements to continue offering its broad global range of offerings post-2M. Many experts are predicting there will be plenty more inter-alliance slot charter deals, similar to Hapag-Lloyd’s recent agreement with 2M for Asia to North Europe.

“Alliance membership becomes more difficult to reconcile with far-reaching vertical integration strategies of carriers. Both Maersk and MSC have taken distinctive steps in this direction in the past few years,” commented Theo Notteboom, a professor of port and maritime economics at the University of Antwerp in a post on LinkedIn.

The dissolution of the 2M partnership is expected to reshape alliances on the Asia-Europe, Trans-Atlantic and Trans-Pacific. “This will change the competitive dynamics on the major East-West trades for all major carriers, and clearly all carriers will take a close look at which threats and opportunities this will bring forth,” Lars Jensen, shipping analyst and CEO of Vespucci Maritime wrote on a LinkedIn post. “This is only the first domino piece falling,” he added.


Falling Global Shipping Costs Signal Easing Inflation

The drop in the cost of shipping containers will help reduce price pressures, Jonathan Ostry, a professor at Georgetown University and the former acting director of the International Monetary Fund’s (IMF) Asia and Pacific department wrote in a post on the IMF’s website.

In a previous IMF study by Ostry and four colleagues examining the link between shipping costs and prices, they found that inflation picked up by about 0.7% when freight rates doubled.

World container rates climbed more than sixfold by October 2021 from pre-COVID-19 levels. “Given the actual increase in global shipping costs during 2021, we estimate that the impact on inflation in 2022 was more than two percentage points — a huge effect that few central banks would dismiss,” Ostry pointed out.

Some inflation drivers could not be anticipated or were difficult to forecast, such as supply chain disruptions, commodity-price increases owing to Russia’s invasion of Ukraine, and the unwinding of pandemic-era savings that boosted demand.

According to an index compiled by Drewry, container shipping costs from Asia to the U.S. has dropped to $1,200 from a high of $8,585 in March last year (see Figure 1). Ostry and his colleagues suggest that most of the inflationary impact from shipping costs is over. “Shipping costs’ role as a driver of global inflation is under-recognized — this needs to change,” he said.

Source: Transport Topics

Analyst Discusses Expectations for Air Freight Market in 2023

During a recent Summit, Niall van de Wouw, Chief Air Freight Officer at Xeneta, shared key market trends that will most likely impact air freight rates this year.

There are expectations of reduced spending by European and U.S. consumers on goods in 2023 versus 2022, according to data collected from Xeneta’s audience during the summit, painting a bleak picture for air freight.

A reduction in consumer spending would translate into dampened air freight growth, driven by two key factors. The first is an increased cost of living which reduces disposable income and the shift in spending over to services. The second factor comes from ocean schedule reliability, which has been improving, lowering the need for air freight.

Van de Wouw pointed out that with 97% of the volumes moving by ocean and 3% by air, any spillover from ocean to air considerably impacts the air freight market.

He mentioned that more environmentally conscious shippers looking to lower their carbon footprint or are willing to accept extra lead times would choose ocean freight over air freight.

From the demand side, there will likely be less need for general air freight in 2023 than in 2022. Van de Wouw added that surface transportation modes should be monitored closely for unknown events, which might boost air freight demand. But overall, muted growth is expected in 2023.

Source: Xeneta

North European Container Ports Brace for Volume Downturn

Container hub ports in North Europe facing weak January import volumes from Asia expect the softening trend to persist throughout the year.

The CEO of Gothenburg Port Authority, Elvir Dzanic, said there were signs of falling import volumes in general. “We saw clear indications towards the end of 2022, and the initial trend in 2023 suggests a further decline, as product owners have full warehouses and are seeing lower demand, resulting in reduced transport requirements.”

CEO of Port of Hamburg Marketing, Axel Mattern, says he does not expect a pick-up in import volumes at Hamburg container terminals for the duration of the year. The port anticipates “a significant drop in handling cargo” in 2023.

Ocean carriers have canceled a high percentage of sailings from Asia to North Europe due to the demand slump. All the container ports in North Europe are experiencing lower volumes from fewer calls. Vessels wait times are almost non-existent.

Source: The Loadstar

Scheduled Capacity Registers Sharp Drop

Ocean carriers have reduced scheduled capacity on Asia-North America West Coast (NAWC) by -18% to rebalance capacity to demand, returning it back in line with historical levels, Sea-Intelligence data shows (see Figure 1).

This was achieved by increasing blank sailings from 7.6% to 35.8%. This trend was also mirrored in the Asia-North America East Coast and Asia-North Europe trades, with the scheduled 4-week CNY capacity deployment decreasing by -11% and -6%, respectively.

Sea-Intelligence charted the progression in the percentage of weekly blanked capacity from week 50, 2022, to week 3, 2023 and noted the difference in how the increase in blank sailings was achieved (see Figure 2).

On both Asia-North America East Coast and Asia-North Europe, this new, higher level was nearly reached by Week 1. In comparison, the level of blank capacity on the Asia-North America West Coast was reached in increments. “This is an indication that perhaps the carriers are not as decisive on the Asia-North America trade lane than on the other two,” commented Alan Murphy, Sea-Intelligence’s CEO.

Source: Sea-Intelligence

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