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Container shipping lines cut Northeast Asia capacity

By Staff Writer

Major shipping lines are reducing capacity in the trade between north east Asia, including China, and Australia with immediate effect.

AAS consortium partners APL, Hamburg Sud, Hapag-Lloyd, Hyundai Merchant Marine and Evergreen Marine have announced that "due to deteriorating market conditions", they have decided to reduce their capacity in the sector.

They said total nominal AAS capacity would be reduced by 3,200 TEUs per week in the period February 1 through to June 2009.

"This will be achieved by idling the AAS southern loop during this period. The AAS northern loop will be adjusted in scope to cover the Taiwan, south China and Hong Kong markets."

The lines said the revised service structure, which would be operated with six modern vessels of 3,600 TEUs nominal capacity, would have the following rotation: Busan-Qingdao-Shanghai-Ningbo-Kaohsiung-Yantian-Hong Kong-Melbourne-Sydney-Brisbane-Kaohsiung-Busan.

The Japanese market would continue to be served through separate individual arrangements.

"The AAS consortium will review the trade prospects in June 2009. Should the trade situation improve sufficiently to warrant additional capacity, the AAS southern loop will be re-established," they added.

The Baltic Dry Index (BDI) has shown nascent signs of revival, rising 8.9 per cent over the past few days on stronger booking demand for iron ore and coal transportation to China prior to the Chinese New Year. The BDI, a measure of shipping cost for commodities, rose to 945 points last week from 868 points on January 19.

The record-high BDI in 2008 was mainly fuelled by China's preparation for the Olympics and many other factors that are worthwhile to revisit.