ASIA/EUROPE CARRIERS CUT CAPACITY BY 10%

ASIA/EUROPE CARRIERS CUT CAPACITY BY 10%    Ocean carriers that belong to the Far Eastern Freight Conference have adopted an unprecedented plan to reduce ship capacity in the Asia/northern Europe trade by about 10 percent for a six-month period.
   The carriers are planning to operate “a temporary vessel scheduling and co-operation programme” from Oct. 1 of this year until March 31, 2002, the conference said.
   The announcement of a capacity cut in the high-volume Asia/northern Europe trade comes in the wake of substantial decreases in freight rates caused partly by over-capacity and the stagnation of cargo volumes this year.
   A spokesman for the conference said that the joint capacity program does not say whether ships will be laid up, services withdrawn or merged.
   “It’s up to the carriers involved,” he said.
   The program allows for voluntary vessel withdrawals by the carriers and includes co-operation arrangements to provide full service coverage during the period, the conference said. It is believed that individual carriers withdrawing ships may charter slots on other carriers’ services to continue offering the same port-to-port connections to shippers.
   The FEFC plans to notify the program to the European Commission.
   The first week of implementation of the capacity reduction program is the week starting Oct. 1. The rapid implementation of the capacity cuts is possible in the Asia/Europe trade because European Commission competition rules allow joint agreements between carriers to be introduced without having to wait for a review period.
   A spokesman for Maersk Sealand, the largest carrier in the Asia/Europe trade, said that it was too early to say what the impact of the capacity plan will be on its services.
   According to World Liner Supply, a reporting service of the ComPairData global liner shipping database, ocean carriers in the Asia/northern Europe trade deployed 222 ships in July, representing a gross weekly one-way capacity of about 116,000 TEUs. Carriers of the FEFC control an estimated 60 percent of the ship capacity in the trade.
   The FEFC carriers are APL, CMA CGM, Egyptian International Shipping Co., Egyptian Navigation Co., Hapag-Lloyd, Hyundai Merchant Marine, “‘K” Line, Maersk Sealand, Malaysia International Shipping Corp., MOL, National Shipping Company of Saudi Arabia, Nippon Yusen Kaisha, Orient Overseas Container Line, P&O Nedlloyd and Yangming Marine Transport.
   In the transpacific trade, shipping lines are considering a similar capacity management program within the Transpacific Stabilization Agreement.