Ocean carriers adjust networks for 2019

Dive Brief:

Ocean carriers announced a series of network shifts this week, as the members of 2M and THE Alliance adjust their capacity and port calls to match demand trends expected in 2019 and prepare for IMO 2020.
THE Alliance will replace three of its services (FE1, PS1 and PS2) with a new "pendulum service" between Europe and Asia, with eight destinations in between. It will also add a new Pacific Northwest 4 service, running from Xiamen, China, to Tacoma, Washington, and back, according to a press release.
2M will add six ultra large container vessels into 10 of its Asia-Europe services and drop eight port calls as of March 2019, according to The Loadstar. Despite the bigger ships, weekly capacity will be unaffected next year as the carriers are planning longer transit times, which include buffers for port congestion.

Dive Insight:

The major alliances' shifts to their ocean shipping networks reflect the various strategies carriers are pursuing to bolster their revenues or market share.

In 2M — an alliance made up of Maersk Line and MSC, but which also includes partnerships with HMM and ZIM — the prolonged transit times reflect a bid by Maersk Line to differentiate itself on service. Buffer times would add reliability to its schedules and reduce delays for customers.

But slower transit time, The Loadstar adds, could also help the alliance compete on costs when IMO 2020 hits. Some of Maersk Line's ships will be operating on low-sulfur fuel, which reduces emissions but comes with a higher price point. Slower ocean transit could help reduce fuel usage and therefore costs.

THE Alliance — made up of ONE, Hapag-Lloyd and Yang Ming — is still reeling from the botched launch of one of its members, which led ONE to lose market share this year.

In a conversation with The Loadstar, ONE CEO Jeremy Nixon said the group's "rehabilitation plan" relied in part on a "recovery of liftings" on its transpacific lanes. THE Alliance's service reveals the carrier first sought to consolidate its sailings into a "more efficient" pendulum service. Second, it added new, direct services to Tacoma, Washington, and Vietnam.

Alphaliner said THE Alliance's PN2 transpacific service marks the "first direct North Vietnam-US connection," according to The Loadstar. As trade tensions grow with China, markets like Vietnam are picking up the slack as supply chain destinations — a demand trend THE Alliance hopes to tap.