Carriers cut 10 percent of capacity on the Asia-South America service to keep freight rates low

MAERSK, CMA CGM, Hamburg Sud, CSAV, China Shipping Container Line and Hanjin have terminated the joint Asia-South America SEAS 3 / ASAX 3 / ASX 3 / NGX 3 joint service, reducing capacity by 10% to cope with the situation. Freight rates go down.

CMA CGM said the service was suspended “in line with market conditions and supply adjustments in the trade.” According to Hamburg Sud, this “reflects a fall in output from November to April” and CSAV Said they “react to market conditions.”

The suspension has removed 10 lines of 6,500 TEU-8,500 TEU vessels, according to Lloyd’s List Intelligence.
The Shanghai Container Freight Index (SCFI) showed that spot rates from Shanghai to Santos at US $ 2,223 per TEU in January were down 68% to $ 710 per TEU.

Analysts at Braemar Seascope, the brokerage for the carrier, said rates were down because carriers added to the larger vessel, which resulted in massively loading capacity into larger trades.

Weekly capacity on the service at the end of October increased 23.7% year-on-year to 96,289 TEUs.

While capacity is up 20% this year, demand is weakening, according to MDS Transmodal, which forecasts that output from Asia, excluding the Indian subcontinent, to the east coast of South America will grow 8.4% By year in 2013, reaching 1.9 million TEUs.

The effect from the addition of larger vessels is more severe as the Brazilian economy grows slower than expected.

According to Alphaliner, carriers have made a series of adjustments to ensure the frequency and coverage of the SEAS 3 / ASAX 3 / ASAS 3 / NGX 3 service.