Supply Chain Research

Four Asia-domiciled container-lines are offering a new east Mediterranean-to-U.S. east cost service from April 2020, including Ocean Network Express, Yang Ming, COSCO Shipping Lines and its subsidiary Orient Overseas, to be known as EMA (Eastern Mediterranean America). 

The service is notable for a number of reasons. Firstly, it is another example of a cross-alliance service – ONE is part of THE Alliance while COSCO belongs to Ocean – which comes just as the EU is deciding whether to continue to allow the block-exemption for container lines from competition rules as outlined in Panjiva’s research of Jan. 15. The arrangement runs the risk of leading the EU to reconsider its allowance.

Second, the service comes amid a widespread downturn in Asia-to-Europe services – that may be leading the container-lines to look for ways to bolster their volumes. It should be noted that the service calls at COSCO Shipping’s Piraeus port in Greece as well as stops in Turkey, Israel, Egypt, Italy and Spain.

Panjiva data shows that shipments from the six countries on the European side of the route expanded by 10.0% year over year in 2019, including a 34.0% surge in shipments from Turkey while shipments from Spain improved by 12.7% and shipments from Egypt increased by 10.7%.

Yet, that expansion slowed markedly in Q4 with shipments unchanged compared to a year earlier while January saw a 6.4% slide. The latter has been due to a marked reversal in shipments from Italy, Greece and Israel.

 

Chart segments change in U.S. inbound shipments from six countries to all U.S. ports. Source: Panjiva

 The targeted U.S. ports on the route (including New York, Norfolk and Savannah) have already attracted major carriers with Maersk having most recently built up services in 2018, making it the leading liner on the routes with a 16.6% share in the 12 months to Jan. 31. That was followed by MSC – Maersk’s partner in the 2M Alliance – with a 16.1% share. In the second tier Hapag-Lloyd held a 12.9% share and has bucked the trend of lower traffic in January with a 13.7% surge. 

Major potential customers that ship from the six countries into the U.S. ports covered by the new route include leisure goods maker Keter with 16,200 TEUs shipped in 2019, Ford Motor with 4,600 TEUs of parts shipped from Turkey and Spain and Molson Coors with 4,200 TEUs of beer shipped from Italy. 

Chart segments imports to New York, Norfolk and Savannah from Egypt, Greece, Israel, Italy, Spain and Turkey by container-line on a monthly and three-month average basis. Source: Panjiva