Ocean Three Carriers Take the First Hit

The Ocean Three (‘O3’) carriers, CMA CGM, CSCL and UASC, have made the first concession in the ongoing Asia-Europe rate war, according to shipping analyst Alphaliner.

Namely, the carrier alliance has decided to withdraw one of their four Far East-North Europe strings for 12 consecutive weeks starting from the end of this month.

Alphaliner deems the capacity withdrawal unprecedented as it coincides with the start of the summer peak season which normally runs from late June to early September on the Asia-Europe trade.

“It appears that the rate war has taken a heavy toll on the ‘O3’ carriers, forcing them to take drastic action. Apart from the cost of idling the affected vessels, the carriers will also risk losing market share to their competitors, who stand to benefit from the cargo shifts away from ‘O3’, as well as the improved chances of securing part of a proposed general rate increase (GRI) scheduled on 1 July,” the shipping analyst says.

The ‘O3’ move will effectively remove around 12,000 teu weekly from the FENorth Europe trade, representing about 20% of the ‘O3’ capacity and 4% of the total capacity on the route, according to Alphaliner figures.

As a result, the carrier alliance may be forced to make the capacity cut permanent, as cargo volumes are unlikely to pick up in September to support the resumption of regular services.

The capacity removal may also be insufficient to ensure the success of the 1 July GRI, if other carriers do not match the ‘O3’ move with capacity cuts of their own, Alphaliner concluded.

Image: Hamburg Hafen

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