Danish liner giant Maersk Line has cut capacity by 10 percent on the trade between the east Coast of South America and Europe and the Mediterranean in response to the “steady decline” in market demand.
It has decided to axe the capacity as it battles with an oversupply situation. The Danish carrier said there was substantial “open capacity” on services between the Mediterranean and north Europe and South America. To achieve this, the line will phase-in smaller 4,500-6,500 teu ships to replace the 8,500 teu vessels.
Prior to the move, vessels with an average size of 7,900 teu were in use on the route. It said this would reduce trade lane capacity by 10%, including reefer plugs. “We have, over a longer period of time, seen declining market demand on the popular trade between the east coast of South America and Europe and the Mediterranean,” Maersk Line said.
“This weakening demand has led to substantial open capacity and resulted in a need to adjust our network to match the changing market forces.”
The weakening economic outlook for South America is reflected in the container volumes reported so far for 2014. According to figures from Container Trades Statistics, volumes from Europe
to South and Central America declined by 2.7% year on year during the first 11 months of 2014, to 1.4m teu.
But in the opposite direction, volumes have climbed by 2.4% over the same time period to 1.5m teu.