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Maersk &MSC has canceled the trans-pacific lanes from Asia to US west coast to keep the sky-high ocean rate keep on going

18 Mar 2021

By Arthur Chen     Photo by David Vives on Unsplash

2M alliance (Maersk & MSC ) has announced to cancel the main lanes of trans-pacific by week# 8 ( last week of Feb ) in between Far East, China, Southeast Asia and West Coast of US by the reason of being in congestion severely from LA/LB up to Oakland, Seattle/Tacoma and Vancouver over months which caused averaging over 2 weeks queued up for berthing till unloading containers.  The congestion in main seaports in west coast, especially in Los Angeles, Long Beach ports have made all shipping schedules of trans-pacific lanes heavy time lag occurred and the on-time ratio reach less than 32% in last two months 2021.  Also because of the heavy delay and long queue before berthing to ports, steamship lines lost not just time but also huge unexpected expense and the containers return to Asia.   Started after Chinese New Year holiday, the super high demand of space from Asia to USA has showed upward drastically than expected.  The serious shortage of space provided by steamship lines could not fulfil the demand in March.  Fully booked and rolling over happened constantly so as to the sky-high ocean rate keep on there.  It is said the ocean rate have reached 500% - 700% compared to 2019.

2M alliance give up the huge benefit of trans-pacific lanes seems not wise, however, if we look at the other lanes in between Asia to Europe in which the ocean rate is 30-50% higher than rate from Asia to USA, and more important there are much shorter waiting days in main seaports in Europe for berthing and unloading containers in which around 3-5 days only.  2M has quite fair reason to call off trans-pacific lanes or so call “blank sailing” policy is actually a smart strategic to win more benefit and cut expense down to avoid the continually congestion in west coast of US.  It is said the congestion shall be lasting 2-3 more months more from now onward.  

2M has just published another statement on March 18th that they are going to launch new trans-pacific lane (TP23/Palmetto) from Asia to East coast effected by May 2021 in viewing the less congestion compared East coast to West coast in averaging a week shorter. Look at the great margin in the US market there is no reason not to keep grabbing in hands.  In brief, the pulling off sailing from later Feb till further notice in west coast shall keep the unbalance of space supply and demand in the consequence of pushing the sky-high ocean rate in peak level for few more months. And then open up a new lane to East coast is considering to have on going high margined income after European ocean rate down once the demand dropped in mid of 2021.

The giant market volume share of 2M is one of the hands to make ocean transportation changed way of game.  You have no way to get rid of its influence at all.  Even the FMC of US, MOT of China and European commission have put the eyes on monitoring these high ocean rate raised for almost 8 months. Steamship liners, though made huge income, are still dominated the transportation market and potentially push up the CPI and inflation sooner or later. Of course, the almost zero bank interest ratio shall be the key factor but high ocean rate is also a helper.  

Read more related articles :Ocean freight market rate in week 11

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