Grand Alliance suspends an Asia-Europe loop

   The Grand Alliance carriers will this month pull one of their four services connecting Asia and Europe, according to a note from member Hapag-Lloyd on Monday.
   GA lines, which also include NYK Line and OOCL, will pull their Loop D/EUD service from the Nov. 6 sailing. The service, according to American Shipper affiliate ComPair Data, has a rotation of Busan, Qingdao, Shanghai, Ningbo, Shekou, Yantian, Cai Mep, Singapore, Southampton, Le Havre, Hamburg, Rotterdam, Singapore, Shanghai, and Busan.
   It’s currently operated with 10 vessels (seven from OOCL, two from Hapag-Lloyd, and one from NYK) with an average capacity of 5,688 TEUs. That’s by far the smallest average vessel size of the four Asia-Europe loops run by the alliance. The other three employ ships in the 8,000- to 9,300-TEU range.
   Asia-Europe loops operated with ships below 8,000- to 9,000-TEUs are under increasing pressure as rates on the trade plummet, and the smaller ships have slot costs too expensive to bear.
   “Freight rates on the Far East-North Europe spot market have dropped to less than $680 per TEU, while the average (bunker surcharge) presently stands at $750 per TEU,” the maritime analyst Alphaliner wrote last week. “This suggests that the ocean freight rate net of (bunker surcharge) has dropped below zero, to an unprecedented negative $70 per TEU, which is lower than the net rates observed in 2009.
   “However, these ‘negative’ freight rates are illusory as current (bunker surcharge) levels fail to incorporate cost savings from extra-slow steaming and from the impact which the introduction of larger ships had on actual per-container fuel costs,” Alphaliner said.