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MSC ramps up Asia-SA capacity

11/13/2010 10:02:20 AM

A decision by the world's second largest shipping line to hike capacity on the Asia-South Africa trade by close to 30 percent a week is raising eyebrows.

 

MSC will deploy two 8,000 TEU vessels on the Cheetah Service covering southern China and South African ports, Durban, Port Elizabeth (Ngqura) and Cape Town, ramping up the carrier's weekly capacity.

 

The decision apparently follows "a careful analysis of market demand". Business has certainly been booming on the Asia-South Africa-South America trade, which has been expanding at double-digit rates. But not everyone is convinced. "This is not a move to meet a growing market, but more one of necessity that bypasses the lay-up programme and keeps vessels in employment," a shipping line executive said.

 

It is a view that holds water. So far this year, the Geneva-based carrier has taken delivery of 17 vessels in the 13,000-14,000 TEU category, totalling a staggering 225,000 TEU of capacity. A further six vessels in the same league are due to follow later this year and in 2011. Numerous market intelligence providers have warned that slowing demand and the influx of newbuildings will result in capacity cascading from the major Asia-Europe trade into the smaller trades.

 

"MSC has larger capacity being delivered to the Asia/Europe trade and that will free up vessels of around 8,000 TEUs, which then need to find a home," said a UK-based analyst. "The Far East-South Africa trade may be growing, but it is seasonal and it doesn't need a 27 percent increase in weekly capacity."

 

Up until the end of the third quarter, MSC operated the Cheetah Service with seven vessels providing an average weekly capacity of around 4,500 TEU. By the end of the year, weekly capacity will have reached 5,900 TEUs, up 27.5 percent. No other lines have shown signs of increasing capacity on the trade. Maersk and Safmarine will remain at an average weekly capacity of 5,000 TEU on their joint Safari 1 service, and 1,700 TEU on Safari 3.

 

South Africa's ports authority Transnet has been working hard at deepening and expanding its ports. Dredging work has been done in Durban to accommodate larger vessels, while the new Coega terminal at Ngqura near Port Elizabeth is already capable of handling 8,000 TEU vessels.

 

When the expansion plans at Cape Town Container Terminal have been completed, the terminal should have an annual handling capacity of 900,000 TEU.

 

Cargonews Asia

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