Playground of the alliances

Consultant Dynaliners has taken a look at the key east-west container trades in its latest study, East-West Container Trades (2015); the Alliances Playground. The findings make interesting reading for ports on these container arteries.

The study defines the parameters of the east-west trades and then looks at the major trades, namely: Transpacific West Coast, Transpacific East Coast, Far East-North Europe, Far East-Mediterranean, Transatlantic North Europe and Transatlantic Mediterranean.

A statistical analysis reveals that MSC is the largest carrier by share of trade capacity (14%) on these trades with Maersk Line hot on its heels with 13%.

In terms of the overall structure of the East-West liner trades, as of early 2015 the study identifies 26 liner operators providing vessels and services along one or more of the three main plus three parallel East-West trades. In all, these carriers deploy nearly 1,000 ships with a combined nominal container carrying capacity of almost 7.7m teu, an average of 7,900 teu per vessel.

These vessels were deployed on 120 liner services with approximately 60 of these provided via the mega alliances of G6, CKYHE, 2M and Ocean Three.

Fifteen of the 26 carriers have a rounded annual trade capacity of 1m teu or more with these fifteen millionaires combining to provide 94% of east-west annual trade capacity. Further analysis of the trade structure include sections on ports and throughputs, and annual trade capacity and carryings.

A major impact factor for these trades is, unsurprisingly, “ever larger ships”, says the report. Dynaliners makes the interesting point that it “took more than thirty years from the very first containerships of the mid-1950s to 1988 for the size of the largest vessel to grow to 4,500 teu capacity, a straight line average of 140 teu per year”.

“It then,” says Dynaliners, “only took up to 2005 for the size of the largest container ship to double, a rate of 276 teu per year for that second 4,500 teu over those seventeen years.” And then: “By the end of 2014 the 19,000 teu barrier was breached, a growth rate approaching 980 teu a year post-2005.” A section on vessel sizes pits the end of the line in terms of vessel size at around the 24,000 teu mark as a maximum.

Balancing act

There is also plenty of discussion on volumes and the age old problem of balancing supply with demand. This balance has not been achieved and that this continues to contribute to poor freight rates and ultimately to carriers pooling resources and assets to form alliances.

The report also makes some interesting observations on bunkers as an impact factor. It puts forward an argument that a sustained fall in bunker prices may work against the industry, reminding us that the phenomenon of slow steaming was essentially born out of high bunker prices and suggests that sustained lower bunker prices may lead to a call for a return to operating fewer ships at faster speeds. It does also note, however, that the bunker prices available at the start of 2015 are in line with those of mid-2007 and that within a year they had doubled.