CSAV Suspends Three Services in a Month

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CSAV has suspended three different services within a month.

1) Mare Nostrum service, which goes between Asia and the Mediterranean.
2) ASIAM service, which goes from Southeast Asia, China and India to the US West Coast.
3) NACSA service along the Pacific coasts in the Western Hemisphere.

CSAV is a Chilean ocean shipping company, currently the largest in Latin America and one of the oldest in the world.

The Mare Nostrum service was suspended based on the “unfavorable economic environment affecting the trade between the Far East and the Mediterranean.” Since early 2011, ocean freight rates on the Asia-Europe trade lane have been declining. Ocean shipping companies have been ordering and receiving larger vessels that are better designed for this purpose.

The ASIAM service has been suspended because of “prevailing negative market conditions on the trans-Pacific trade.” Spot freight rates have been lagging all year and are “19 percent lower than what they were at this time last year,” as stated in a Journal of Commerce article.

The NACSA service was suspended because of “unfavorable economic environment affecting trade between North America West Coast and South America West Coast.” The Journal of Commerce also stated that “The Shanghai Containerized Freight Index for Asia-Europe business reached its 2011 low in the last week of June at $845 per 40-foot equivalent, less than half the SCFI’s measure from a year ago and down some 15 percent since the start of the second quarter.” They report that “Alliance members Hyundai Merchant Marine, APL and MOL will remove one weekly string of vessels, each averaging 3,960 TEUs, in the Pacific Southwest service. The lines term the move an effort to right-size capacity given reduced expectations for imports from Asia.”

Demand for retail merchandise has been lagging this year, causing problems for the maritime industry. Inventory ocean freight orders are low and consumer spending is soft. “Softening consumer demand is giving importers cause to retrench in regards to inventory levels previously planned for the upcoming holiday shopping season,” said Lamont Peterson, Vice President-Marketing at Hyundai Merchant Marine.

Adjustments in remaining services of the ocean shipping industry from Asia to the West Coast, must be made. The goal is to maintain sufficient capacity for US importers. In a press release, Hyundai said that “Hyundai and TNWA will accommodate their customers’ requirements for space, even during periods of increased demand, on remaining strings that duplicate the PSW ports of call.”

Nelson Cabrera
Nelson leads global business development efforts within ShipLilly and has been featured as a logistics expert in numerous publications, including SupplyChainBrain, The Bulletin Panama, Logistics Management, and the Miami Herald.

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