Following the May Day holiday, on the first working day, Maersk provided price quotes for Week 21 via its e-commerce platform. These quotes showed an increase of $300 to $500 per forty-foot equivalent unit (FEU) compared to Weeks 19 and 20. Quotes on certain routes were near $2,900 per FEU, a level similar to MSC's e-commerce pricing. Historically, since the dissolution of the 2M alliance, Maersk's quotes have typically been lower than those of MSC.
Additionally, the highly cooperative co-loading situation between MSC and the Premier alliance, which includes Yang Ming, ONE, and HMM, must be considered. Co-loading implies that ONE, HMM, and Yang Ming will need to significantly raise their rates to match MSC's level of approximately $2,900 per FEU, compared to the special rates offered during the May Day holiday. A significant price discrepancy between different booking channels for the same co-loaded vessel could potentially harm customer relationships.
Given the context of China's higher-than-average export growth to Europe from January to March, a significant decline in exports in the short term, over the next three to six months, due to rising energy costs is not currently anticipated. The remaining question is whether the discipline in controlling shipping capacity can support shipping companies' frequent attempts to push freight rates higher.
Regarding Maersk's recent decision to redeploy vessels from Northwest Europe to the East Mediterranean routes, this represents a recent shift in fleet allocation. Since 2021, it has been noted that the GEMINI alliance's orderbook for new vessel construction is smaller than those of MSC and the OCEAN alliance. This has allowed MSC and the OCEAN alliance more flexibility to proactively move ultra-large container vessels away from the Europe-Mediterranean routes, with MSC redirecting some to West Africa and the OCEAN alliance previously utilizing them in the Persian Gulf before March. Maersk's recent strategy involves reallocating vessels within the Europe-Mediterranean network.
Starting from Week 22, which is the last week of May, vessels with capacities between 17,000 and 19,000 TEU serving the Northwest European AE3 and AE5 routes are being reassigned to the AE15 route, which connects the Far East with the Eastern Mediterranean. The AE3 route will subsequently be serviced by smaller vessels in the 12,000 to 15,000 TEU range, which were previously used on the AE15 route.
The impact on capacity is notable. The GEMINI alliance's weekly capacity on Northwest European routes, which ranged from approximately 73,000 TEU to 83,000 TEU from the beginning of the year through Week 21, is projected to decrease to a range of about 71,000 TEU to 78,000 TEU for Weeks 22 to 32. This strategic adjustment alleviates some pressure on cargo acquisition, potentially strengthening Maersk's confidence in implementing rate increases.
Furthermore, deploying more efficient vessels to the AE15 route, which serves Eastern Mediterranean ports such as those in Eastern Egypt, and introducing the new AE19 route, which transits the Suez Canal from north to south to serve Jeddah using smaller vessels of around 12,000 TEU, may indicate that European liner companies perceive stronger, more urgent, and relatively inelastic import demand and freight revenue potential in the Arabian Peninsula amidst ongoing geopolitical tensions, compared to the traditional Northwest European and West Mediterranean routes.
A key remaining issue is the current level of shipping capacity supply. Following the May Day holiday, capacity supply is relatively constrained, partly due to blank sailings implemented by the OCEAN and Premier alliances. However, as time progresses, this supply is expected to become more abundant. The overall level of blank sailings by the MSC & Premier alliance and the GEMINI alliance is significantly less than that of the OCEAN alliance, leading to an uneven distribution of cargo acquisition pressure. If alliances facing greater pressure continue to rely heavily on special low-rate offers to attract cargo, the pricing strategies of carriers outside the traditionally higher-pricing groups could face increased challenges.
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