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Asia-Europe Marine Line 2013: Analysis and Forecast

As a result of factors such as declined volume, excessive capacity, high oil prices, and the increase in number of super large container ships being delivered, the ocean container shipping companies are facing an unfavorable situation. To maintain profitability in 2013, the Asia-Europe routes will continue to be a top priority in the strategic planning of the shipping companies.

The Asia-Europe line is always supporting marine companies.

The affects of the European debt crisis on the market

The first half of 2012, although facing an adverse market, shipping companies were determined to decrease capacity. Many companies gained a profitable turnaround after successfully raising the freight pricing several times.

However, in 2013, methods like successfully reversing the downturn of the freight pricing since the second half of last year need to be followed.

Merchandise purchasing has been reduced by the cash-strapped European consumers around Asia, especially China. The declining trend of the increasing of freight pricing has been aggravated due to the low demand during peak season.

The future market depends largely on the developments of the European debt crisis. The current difference in economic state that has formed in members of the European market has resulted in Nordic shipments being in a far better situation than the Mediterranean region, due to Spain and Italy being trapped in the plight of the recession and falling deeper than those in other countries.

The withdrawal of numerous freights to accommodate the Christmas and Chinese New Year which were expected to be a period of decline resulted in a good start in 2013 for top shipping companies. As an example, during January 9th to February 15th seven freights were withdrawn by the great alliance of six shipping companies. The industry leader Maersk is also slowing the speed of its AE1 route.

These initiatives were originally designed to provide support for the shipping companies’ price increasing plan, but that did not prevent the drop in freight rates in Asia and Europe. Only three weeks after the increase from $500-$600 in November, the price fell by nearly 30%. Furthermore the first quarter is traditionally a quiet period so the declines could continue.

The most fundamental strategy is for the shipping companies to further decrease capacity. It is estimated that the Asia-Europe line has 15% excessive capacity. The excessive capacity could become even greater if exports from Asia to the euro zone continue to maintain a double-digit decline.

Shipping Giants Maersk, Mediterranean Shipping and CMA CGM have taken the lead to adjust the supply and demand, but with little success. In October last year, the market share of those three in the Asia-Europe line had dropped from 53% at the peak period in April to 46%, however this didn’t stop the decline of the freight price.

The biggest question is whether they are ready to continue to reduce supply on orders to support freight prices, or at least hang on to the rebound of the second quarter as expected, and more importantly whether they are willing risk losing market share by providing this opportunity for their 18 competitors in