Changing picture on the Far East – WCSA trade lane
The continued aggregation of the container shipping lines through consolidations and mergers and acquisitions (M&As), along with various Vessel Sharing Agreement (VSAs) has had a profound impacts on many of the world’s trade lanes. This article examines the changes that will take place from April 2018.
Prior to April 2018, the Far East – West Coast South America trade lane was characterised by four different VSAs, as shown from Table 1:
- Maersk, the world’s largest container line, operates three services independently from MSC the 2M’s other member, known as AC1, AC2 and AC3.
- Hamburg-Sud, which Maersk has recently acquired, was part of the multi shipping line ‘ACSA’ VSA, running three loops operated by APL, CMA-CGM, COSCO, Hapag-Lloyd, MSC and Hyundai. The ‘ACSA’ VSA deploys the largest vessels with an average capacity of 9,671 TEU.
- The ‘WSA’ VSA is made up of five East Asian shipping lines; COSCO, Evergreen, PIL, Wan Hai and Yang Ming. It operates two services known as ‘WSA’ and ‘WSA2’.
- The three big Japanese shipping lines (K-Line, MOL and NYK) ran their own Far East – West Coast South America service known as ‘Andes/Alex’.
Table 1: Services on Far East-West Coast South America – March 2018
|VSA||Service||No. of Vessels||Average TEU||Deployed TEU|
|ACSA||APL/CMA-CGM/COSCO/HYUNDAI/MSC - ACSA2/ANDES||12||11,894||618,462|
|APL/HAMBURG-SUD - ACSA/AN1||10||7.520||391,040|
|CMA-CGM/HAPAG-LLOYD - ACSA3/AME1||11||9,202||478,504|
|MAERSK LINE - AC1||10||4,357||226,573|
|MAERSK LINE - AC2||7||9,028||469,456|
|MAERSK LINE - AC3||11||9,542||496,165|
|WSA||COSCO/EVERGREEN/PIL/WAN HAI/YANG MING - WSA||10||8.799||457,548|
|COSCO/EVERGREEN/PIL/WAN HAI/YANG MING - WSA2||10||5,030||261,550|
|ALEX||K-LINE/MOL/NYK - ANDES/ALEX||11||6,475||336,686|
Source: MDS Transmodal Containership Databank, March 2018
As shown in Table 1, the ACSA has the largest deployed TEU capacity of 1.5m TEU, followed by Maersk with 1.9m TEU. In third place WSA with just over 720,000 TEU of deployed capacity followed by ALEX with its sole service equating to 337,000 TEU.
Since regulatory authorities in China require Hamburg-Sud to cease its existing cooperation with rival partners, the German shipping line will, in April 2018, jointly operate four services with its parent company Maersk. The AC1, AC2 and AC3 services will continue to operate a similar rotation although the transhipment calls at Tauranga, New Zealand will be dropped. An additional service the ‘AC5’ begins in April, uniquely serving West Coast South (and East Coast South America) eastbound only, effectively making it a ‘RTW’ (round the world service) via the Panama Canal and the Cape of Good Hope.
ONE, newly formed and comprising K-Line, MOL and NYK has replaced the world’s 3rd and 4th largest shipping lines, CMA-CGM and COSCO respectively in the former ‘ACSA’ VSA with Hapag-Lloyd, Hyundai and MSC. These lines are still operating three services but now under the ONE prefixes of ALX1, ALX2 and ALX3. K-Line, NOL and NYK’s standalone ‘Andes/Alex’ service has been terminated.
The two ‘WSA’ and ‘WSA2’ services remain largely the same, operated by COSCO, Evergreen, PIL, Wan Hai and Yang Ming. APL and CMA-CGM now also join the ’WSA’ VSA and combine to operate the ‘WSA4’ service, with the remaining group members taking up slots. In addition CMA-CGM, COCSO and Evergreen will provide vessels to the new ‘WSA3’ service.
Table2: showing the services on Far East – WCSA trade lane in April 2018
|VSA||Service||No. of Vessels||Average TEU||Deployed TEU|
|WSA||COSCO/EVERGREEN/PIL/WAN HAI/YANG MING - WSA||10||8,915||463,554|
|COSCO/EVERGREEN/PIL/WAN HAI/YANG MING - WSA2||10||5,124||266,469|
|CMA-CGM/COSCO/EVERGREEN - WSA3||10||8,106||421,512|
|APL/COSCO/CMA-CGM - WSA4||11||10,153||527,943|
|MAERSK||HAMBURG-SUD/MAERSK - AC1||11||4,428||230,265|
|HAMBURG-SUD/MAERSK - AC2||7||9,199||478,355|
|HAMBURG-SUD/MAERSK - AC3||11||9,432||490,447|
|HAMBURG-SUD/MAERSK - AC5||11||7,064||367,309|
|ALX||HAPAG-LLOYD/HYUNDAI/ONE - ALX1||11||9,346||485,973|
|HAPAG-LLOYD/HYUNDAI/MSC/ONE - ALX2||11||12,314||640,309|
|HAPAG-LLOYD/HYUNDAI/MSC/ONE - ALX3||11||6,510||338,494|
Source: MDS Transmodal Containership Databank, April 2018
As shown in Table 2, the ‘WSA’ leads the way in terms of deployed capacity with 1.7m TEU;,in second place Maersk/Hamburg-Sud has 1.6m TEU, followed by ALX which accounts for 1.5m TEU of deployed capacity. Average vessel TEU size has increased marginally from 8,008teu to 8,201teu; 2.5% increase. The total number of vessels deployed on the trade lane has increased by around 24%.
Chart 1: Chart comparing market shares by deployed TEU for March 2018
Chart 2: Chart comparing market shares by deployed TEU for April 2018
Comparing Charts 1 & 2, we can see that the market shares on the Far East-West Coast South America are more evenly spread in April 2018 than in the previous arrangement of March 2018. With an additional two services the ‘WSA’ VSA now leads in terms of market share, having been third with 19% prior to the introduction of APL and CMA-CGM. Maersk’s market share by deployed capacity has increased very slightly by 1%. The ALX grouping lies in third place with a share just 2% below that of second place Maersk.
The number of VSAs in the Far East-West Coast South America trade lane has decreased from four to three, with ONE ending their independent service to team up with Hapag-Lloyd, Hyundai and MSC on the new ALX services. Conversely, however, the number of services has actually risen with the ‘WSA’ VSA now offering an additional two services. Hamburg-Sud and Maersk’s ‘AC’ VSA also adding an additional service, although it could be argued that the ‘AC5’ loop serves both West and East Coasts of South America.
Exploring the service data: whilst the number of individual VSA’s has reduced and consequently competition declined, the capacity has increased through three additional services, each operating on a weekly basis. With the additional capacity comes the threat of lower rates, which has characterised Asia – Europe and to some extent more recently Transpacific (Far East – North America).
It remains to be seen whether this will be the case on the Far East – West Coast South America over the coming months.