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Transpacific carriers start blanking sailings with tariff-hit US imports

TRANSPACIFIC container carriers are beginning to cancel sailings for June as they prepare for decelerated growth of US imports from Asia due to tariffs and after eastbound spot rates to the West Coast fell for the second straight week

Transpacific carriers start blanking sailings with tariff-hit US imports

TRANSPACIFIC container carriers are beginning to cancel sailings for June as they prepare for decelerated growth of US imports from Asia due to tariffs and after eastbound spot rates to the West Coast fell for the second straight week

26 May 2019 - 19:00

TRANSPACIFIC container carriers are beginning to cancel sailings for June as they prepare for decelerated growth of US imports from Asia due to tariffs and after eastbound spot rates to the West Coast fell for the second straight week.

According to marine analyst Alphaliner, the Ocean Alliance will blank a June 2 sailing from Fuzhou that was set to call Nansha, Hong Kong, Shenzhen-Yantian, Xiamen, Los Angeles, and Oakland, and a June 18 sailing from Qingdao that was set to call Ningbo, Shanghai, Busan, Colon, Savannah, Charleston, Boston and New York.



The blank sailings will take 23,218 TEU of capacity out of the trade lane, and Alphaliner warned more blank sailings are likely. The Ocean Alliance, a highly integrated vessel-sharing agreement, consists of CMA CGM/APL, Cosco Shipping/OOCL and Evergreen Line.



Eastbound transpacific spot rates to move a FEU from Asia to the US west coast are down 14.6 per cent from two weeks ago, at US$1,442, according to the latest reading of the Shanghai Containerised Freight Index. Container lines have become more agile in matching capacity to demand via blank sailings, Philip Damas, director and operational head for Drewry Supply Chain Advisors, said at JOC's TPM 2019 conference in Long Beach, California, in March.



'This is the strongest sign of discipline by carriers we have seen since 2010,' Mr Damas said.



Partly due to the front-loading of imports to beat higher tariffs last fall, US imports from China have fallen sharply in the early part of the year. Shipments have declined six per cent year over year to 3.5 million TEU in the first four months of 2019, according to PIERS.



Carriers implemented 35 blank sailings through February and into early March, including 22 to the west coast and 13 to the east coast, compared with 11 last year, according to SeaIntelligence Maritime Consulting. Alphaliner in its 6-12 March newsletter noted that the Ocean Alliance cancelled 10 additional trans-Pacific sailings for March-April.



In addition, carriers are telling customers to prepare for the likelihood of missed sailings in the fourth quarter when a number of vessels are taken out of service for a week at a time to prepare the ships for the transition to low-sulphur fuel, as required by the International Maritime Organization's mandate taking effect January 1, reports IHS Media.



Canadian naval forces to build patrol ships after US doubts Canada's Arctic rights



THE civilian Canadian Coast Guard (CCG), built by Irving Shipbuilding in Halifax, will have two new Arctic and offshore patrol ships, Prime Minister Justin Trudeau has announced.



Six similar 425-foot vessels are currently being built for the Royal Canadian Navy, reports the Nunatsiaq News.



Tensions between Canada and the US have been aroused recently over the right to navigate what Canadians consider domestic waters.



These 425-foot CCG ships are to work in the north during the navigable season, roughly from July to October, and can travel in medium first-year ice up to a three feet thick.



The first of the vessels to be completed is the Harry DeWolf, which launched in September.



The new Arctic patrol vessels form part of a broader plan to renew Canada's Coast Guard and naval capacity. In all, 18 large ships will be built at a cost of C$15.7 billion (US$11.7 billion), Mr Trudeau said.



An accompanying news release acknowledged that many of Canada's Coast Guard vessels are in need of replacement.



'The Coast Guard fleet is aging, with most ships beyond their normal life expectancy. There is an urgent need to renew the fleet to ensure the Coast Guard can continue its essential work,' said the CCG release



Another C$2 billion will be spent on repairing Canada's existing Coast Guard fleet.



Speaking to a recent pan-Arctic conference in Finland, US Secretary of State Mike Pompeo said the US has a 'long-contested feud with Canada over sovereign claims through the Northwest Passage.'



Mr Pompeo also denied Russia's claim over what he called 'the international waters' of the Northern Sea Route.



'In the Northern Sea Route, Moscow already illegally demands other nations request permission to pass, requires Russian maritime pilots to be aboard foreign ships, and threatens to use force to sink any that fail to comply,' Mr Pompeo said.



'Under President Trump, we are fortifying America's security and diplomatic presence in the area,' Mr Pompeo said.


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