Shipping’s response to the Red Sea crisis is to reduce capacity to an extent far exceeding expectations, leading to a situation in Europe for Asia-Mediterranean traffic not seen since the pandemic, according to some analysts.
According to Xeneta, new transhipment networks, meant to reduce the impact of Red Sea diversions, are instead adding to it by creating congestion. Deploying more smaller vessels has contributed to an increase in wait times.
The Loadstar recently reported that carrier giants such as Cosco and Evergreen were redeploying tonnage purpose-built for the Far East-North Europe trades to the Mediterranean in the hope of stemming under-capacity there.
“If we focus on the first 14 weeks of 2024, capacity on Asia-Med is up by 8% year on year already, whereas it’s down 3.1% on Asia-North Europe,” Xeneta’s Peter Sand told The Loadstar recently.
“West Med transhipment ports are as busy as ever, and may already be exceeding peak productivity levels,” he continued. “The port of Barcelona handled 48% more transhipment teu in Q1 24 than last year. According to Xeneta data, we can clearly see the attractiveness of this trade, from a carrier perspective.”
The additional attention is having a knock-on effect on wait times, which at Barcelona have increased to 3.53 days. According to Xeneta’s short-term market averages, rates from Singapore to Barcelona were climbing again, from a lull in March, up 10% at the beginning of this month, close to levels last seen at the outset of Red Sea diversions in January.
A customer note from a UK forwarder last week gave a dire indictment of the current scenario. It said: “With demand higher than forecasted, there is a realisation we have entered an extremely challenging period, not seen since the dark days of the pandemic. We anticipate this is likely to continue into Q3, where there may be some respite from new capacity coming into the market.”
The Kwai Tsing Container Terminal in Hong Kong, formerly the world's foremost port in terms of throughput, slipped out of the prestigious top ten rankings in 2023, settling for the eleventh spot. While it remains operational and not yet deemed a "ruin," its decline bears an uncanny resemblance to the relentless spread of "desertification," evident through its falling rankings, diminishing utility, and waning competitiveness. A comprehensive analysis conducted by HK01 delved into the underlying factors contributing to the terminal's downturn, exploring the prospects of a potential resurgence.
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More evidence of the burgeoning direct trade between China and Mexico was on show yesterday after French carrier CMA CGM announced it will launch a new express shipping service between the two countries.
The Marseille-headquartered shipping line said the forthcoming Mexico Express (M2X) service was “specifically designed to streamline your shipments from the Far East to Mexico’s West Coast. This initiative aligns with market dynamics in the region.”
The service will run on a weekly fixed day basis and be operated by eight ships of so far undisclosed capacity, with the following port rotation: Tianjin-Qingdao-Busan-Ensenada-Manzanillo-Lazaro Cardenas-Yokohama-Busan-Tianjin.
The carrier said reefer exports to Asia from Latin America would be transhipped over Lazaro Cardenas.
The first sailing with be on 11 May with the departure of the 4,250 teu ANL Wangaratta, which is currently deployed on the south-east Asia-west Australia AAXW feeder service jointly operated by CMA CGM, Cosco and OOCL, according to the eeSea liner database.
The move will see CMA CGM join the swelling ranks of carriers offering direct services from north-east Asia directly into Mexico on 15 May. OOCL and Cosco will jointly launch their TLP5 string, while MSC is set to introduce a new China-Mexico shuttle service the same day.
Hannibal, the multimodal subsidiary of Contship, will launch a new rail freight service connecting Milan to Budapest and Curtici. The company expects to commence operations by the end of this year.
The service will connect the Rail Hub Melzo, east of Milan, with the BILK terminal in Budapest and the Arad terminal in Curtici. The plan entails two weekly journeys per direction, with a transit time of roughly 48 hours. “Eurogate Intermodal will handle traction in Hungary and Romania, and Oceanogate will manage the Italian route”, Hannibal explained.
Consolidating cargo flows from Türkiye
The main benefit of this initiative will concern traffic coming from Türkiye, as Andrea Spagnuolo, Contship’s Sales & Business Development Manager, pointed out. In other words, the Curtici terminal will become a hub for Turkish cargo destined for Italy. A somewhat similar initiative was launched in May 2023, with the start of a new connection between the Rail Hub Melzo and the port of Trieste. Just like the new Italy-Romania-Hungary link, this service aims to facilitate the entrance of Turkish cargo to Europe.
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