Hapag-Lloyd points to weakening transatlantic

   Weak eastbound demand for space on transatlantic containerships and a spike in capacity are the reason for Hapag-Lloyd discontinuing its Atlantic Express Shuttle (AES) service, not the relatively small size of the ships in the service, said Wolfgang Freese, president of Hapag-Lloyd America.
   Hapag-Lloyd said last week that next month it will discontinue the string, which called just three ports – Hamburg, Antwerp and New York.
   Freese said figures from Container Trade Statistics shows that through the first four months of the year westbound transatlantic trade was up 5 percent and eastbound trade was down 7 percent, when compared to the same four month period a year earlier. Trade was weaker in April, up just 4 percent westbound and down 13 percent compared to the same month last year.
   “The downturn in eastbound volumes is mainly caused by the economic situation in Europe, especially in the Mediterranean where consumer demand is reduced considerably,” Freese said. “The issue is the capacity increase since March this year, which is higher than the westbound market growth, approximately 13 percent. This capacity development has put pressure on the rates as well.”
   American Shipper affiliate BlueWater Reporting said estimated weekly allocated capacity in the eastbound North America-to-North Europe trade was 58,114 TEUs on June 24, compared to 52,829 TEUs a year earlier on June 26, 2011. Westbound weekly allocated capacity on the same lane was 62,087 TEUs on June 24, compared to 52,335 TEUs on June 26, 2011.
   Freese said neither the size nor speed of the vessels employed in the AES were a factor in influencing Hapag-Lloyd’s decision to discontinue the service.
   “We also believe that vessels with a capacity of less than 3,000 TEUs are still able to cater for short-term changes in demand of our customers,” he said. “It should be noted, however, that costs play the most important role in service and customer related decisions – and NY/NJ ports are expensive options.”
   Blue Water Reporting said the average size ship in the North Europe-to-North America trade lane has grown to 4,488 TEUs on June 17, compared to 3,726 TEUs in June 2011. The AES service employed three ships with average capacity of 2,761 TEUs.
   Space-sharing partners in the service included Alianca, Hamburg Sud, Hyundai, NYK and OOCL.
   Andrew Abbott, chief executive officer of Atlantic Container Line said “demand has been fine this year,” but added capacity “killed the golden goose.”
   He noted the New World Alliance added a new string, and larger ships were being employed by both Grand Alliance on its ATX service and by a string shared by CYKH Alliance and Evergreen.
   “The trade didn’t need any of this stuff,” Abbott said. “If it hadn’t happened, rates would have climbed all year. Nobody learns from history.” – Chris Dupin