China Cosco, Evergreen, 3 Lines Form Asia-Europe Trade Tie

   Date:2012-01-05

Dec. 27 (Bloomberg) -- China Cosco Holdings Co.,Ltd. Asia’s largest shipping line, Evergreen Line and three others will form a partnership for Asia-Europe trade, as carriers join hands to counter a slump in cargo rates and overcapacity.

The five shipping lines will provide 12 weekly services to Europe and to the Mediterranean on vessels that can each carry as many as 13,000 20-foot containers, Hanjin Shipping Co., one of the partners in the tie-up, said in an e-mailed statement today. The pact will be effective from the second quarter of next year.

The cooperation follows an alliance formed last week by Neptune Orient Lines Ltd., Hapag-Lloyd AG and four others for the world’s busiest trade lane that has been unprofitable because of overcapacity. Container shipping rates may rise next year as owners join hands to overcome the collapse in fees amid slowing trade growth, according to RS Platou Markets AS.

“Through these partnerships, shipping lines will be able to reduce costs by sharing resources,” said Cho Byung Hee, an analyst at Kiwoom Securities Co. in Seoul. “It’s now become ever more difficult for shipping lines that are not part of any partnerships to survive on the Asia-Europe trade.”

The two other shipping lines in the new partnership are Yang Ming Line and Kawasaki Kisen Kaisha Ltd.

‘Shortest Transit’

“We expect the cooperation will help improve earnings for the companies as it will reduce redundant port calls and provide the shortest transit time from major ports,” Hanjin Shipping said in the statement.

A.P. Moeller-Maersk A/S, the world’s biggest, in September merged some of its trades on the Asia-Europe route into a fixed daily service.

Spot rates for hauling 20-foot cargo box to Europe from Asia fell 62 percent this year to $536 last week, according to the Shanghai Shipping Exchange. The break-even point on the route is at least $700, according to Morgan Stanley.

Mediterranean Shipping Co. and CMA CGM SA, the world’s second- and third-largest container lines, also agreed earlier this month to cooperate on Asia-Europe routes, as part of a wider partnership designed to pare overcapacity and improve service levels.

Demand for cargoes to Europe from Asia will expand 3 percent next year while the fleet of container ships swells 8 percent, according to Clarkson Plc., the world’s biggest shipbroker. World trade will expand 5.8 percent in 2012, down from a previous forecast of 6.7 percent, the International Monetary Fund estimates.

A total of 219 ships with a capacity of 546,000 boxes were idle as of Dec. 19, an increase from 526,000 two weeks ago, according to Alphaliner. Shipowners also scrapped the most container vessels in two years this month, the Paris-based maritime data provider said in its weekly newsletter. 

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