One of the major challenges facing by the container
lines today is the mismatch between the supply and demand of fleet capacity.
While cargo volumes have badly affected since 2009, capacity has continued to
rise strongly as vessels ordered earlier continued to be delivered during the
recession period . And many big vessels like Maersk’s Triple-E 18,000 teu
vessels, currently under construction, are expected to enter the trade in 2013.
Continuing growth in global container capacity
coupled with sluggish volume , forced liners to lay up ships to manage
capacity. Some liners skipped several individual sailings and suspended many
services as a measure to manage over capacity .
Another option the container liners introduced to
mitigate the over capacity was the introduction of slow steaming. The speed of
the ship is reduced considerably so that it will be necessary to deploy more
number of vessels to meet the same demand or to maintain the same
frequency. As per Alphaliner, Paris
based industry analyst, by December 2011 around 7 million teus had been
absorbed, which otherwise would have been a surplus, through this measure. It also helped the
liners to make huge savings on the bunker cost when the international fuel cost
was rocketing up. As per reports , the bunker cost (380 cst) was under USD100
in July 2009, which had gone up to USD750 by 2011 beginning !
In 2011, Maersk Line launched Daily Maersk,
providing customers with a ‘conveyor belt’ service between selected ports in
Asia and Northern Europe. Maersk Line , with largest
vessels and market share, introduced this
service using the slow steaming technique. This new product was born out of
necessity – to cope with the rising bunker cost and to soak up the extra capacity
due to new vessel deliveries. The Maersk way of turning the negatives into
positives !
A daily service between Asia and North Europe with
reliable on-time delivery expects to set a new trend in liner shipping . Changing shipping from the weakest to the
strongest link in the supply chain ! Until now, customers had to adjust
their production schedules and supply chains according to shipping lines’
schedule, which was not so reliable. The engine behind Daily Maersk is 72
vessels operating a daily service between six ports in Asia (Ningbo, Shanghai,
Yantian and Tanjung Pelepas, Laem Chabang, Jakarta) and three ports in Europe
(Felixstowe, Rotterdam and Bremerhaven) - a giant ocean conveyor belt for the
world’s busiest trade lane ! The much awaited 20 Tripple E vessels are expected
to join this service from 2013 onwards- economy of scale , by all means ! As
per the Line’s website they have transported over 2,00,000 containers with 98%
reliability for the first year of operation.
As per the programme the customer can enjoy a daily
cut-off, which means that cargo can be shipped immediately after production
without the need for storage. The main attraction of the programme is that the timely
delivery promise is backed up with monetary compensation .
If
cargo arrival is delayed by 1-3 days, Maersk will pay USD 100 per container to the
customer. If delayed by four days or more, the pay back is USD 300 per
container !
Maersk Line CEO, Mr. Eivind Kolding says “We set out to design a service that takes
the stress out of our customers’ lives, to change shipping from the weakest to
the strongest link in the supply chain. After all, shipping is only around two
percent of our customers’ total cost. And yet our unreliability has until now
forced them to shape their production plans and inventory around it,”
Re
Grouping of Carriers in response to Daily Maersk
To compete more successfully against the Daily
Maersk programme , Mediterranean Shipping Co (MSC) and CMA CGM formed a partnership covering the Asia –Europe
, Asia-Southern Africa and all South American Services. Both companies are
known as strong independent liners, especially MSC, the second biggest line which
grows organically and maintained its family ownership throughout the crisis
period. With this unexpected announcement they literally stunned the observers
!
Within a month’s time, The Grand Alliance ( NYK ,
OOCL, Hapag-Lloyd) and The New World Alliance(Hyundai, APL, MOL) formed the G-6
Alliance. Similarly Evergreen joined forces with the CKYH(COSCO, “K” Line, YML
, Hanjin) Alliance.
In short
within a few months of commencement of The Daily Maersk Programme , the
Asia – Europe service landscape had changed, literally.
Excellent blog! Look forward to seeing more of your updates :)
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