COVID-19 pandemic prompts carriers to make additional capacity cuts

In addition to capacity reductions planned earlier this year, both the 2M and THE Alliance have announced major capacity cuts in the Asia - Europe trade. These will be implemented with almost immediate effect, as carriers are confronted with a sharp decline in westbound volumes.

COVID-19 pandemic prompts carriers to make additional capacity cuts

In addition to capacity reductions planned earlier this year, both the 2M and THE Alliance have announced major capacity cuts in the Asia - Europe trade. These will be implemented with almost immediate effect, as carriers are confronted with a sharp decline in westbound volumes.

Compared to earlier this year, when the COVID-19 outbreak only affected manufacturing in China and thus exports from Asia, the disease has since spread to Europe and to other parts of the world, where nation-wide lockdown orders and production line closures are now putting a lid on demand. Further to the Asia - Europe corridor, the main ocean carriers are also blanking additional sailings on the Transpacific, but to a lesser extent. Hence, even further cuts might be on the table for this trade in the not-too distant future. Besides, India has recently entered a three-week lockdown period which has prompted several shipping lines to announce voyage cancellations in this trade too.

Members of THE Alliance Hapag-Lloyd, HMM, Ocean Network Express, and Yang Ming have decided to void dozens of sailings in April amid anticipated sharp demand downturn caused by the coronavirus pandemic. THE Alliance follows in the footsteps of 2M which withdrew the AE2/Swan and AE20/Dragon services on the Asia-Europe trade for the entire second quarter of 2020.

The capacity withdrawal equals a 21% capacity reduction in the trade. (The void sailings by THE Alliance cover Asia and North Europe route, Asia and the Mediterranean, Transpacific-West Coast as well as Transpacific-East Coast via Panama and Suez canals, as well as the Transatlantic routes).