US-China sanctions take toll on transpacific capacity
By Eva Matthews on 25 July 2018
  COSCO Shipping announced this month the termination of OCEAN Alliance’s transpacific HRX/AAC service, making it the third alliance-operated service to be suspended from the trade in recent weeks. The Chinese state-owned carrier cited  the escalating trade war between China and the U.S. for its decision, along with rising fuel prices, stricter environmental regulations and tightening intermodal capacity. 
  So far, COSCO is the only member carrier of OCEAN Alliance to release any information regarding the trade reshuffle, and online schedules do not yet reflect this change. The HRX/AAC currently connects China with Long Beach and Seattle and deploys six vessels averaging 10,038 TEUs. 
  The decision to end the HRX/AAC comes after both of the other alliances announced cutbacks on the transpacific trade. 2M’s TP1/New Eagle service ended early this month, while THE Alliance’s PS8 is scheduled to make its last sailing next week. 
  APL’s new Eagle Express X (EXX) service is also scheduled to commence in early August and call the ports of Ningbo, Shanghai, Los Angeles, Dutch Harbour, Yokohama and Busan. However, the five 5,100-TEU vessels expected to sail on the service will not do much to offset the withdrawn capacity from the termination of the three alliance services. 
  As a result of the sudden withdrawals from the transpacific trade, overall capacity from Asia to North America has dropped sharply in the last month and will likely continue to see dramatic decreases into August. As seen in the chart above using data from BlueWater Reporting’s Quick Capacity Report, estimated weekly allocated capacity has already dropped by 1.7 percent since the end of June, with a sharper decline expected next month. 
  With the coming suspension of the PS8 and HRX/ACC services, as well as the additional capacity from the new EXX, estimated weekly allocated capacity is projected to drop to 288,299 TEUs by the end of August, a 3.8-percent decline from the current July figures, and fall 5.5 percent from the peak capacity in June of this year. 
  It is important to note that how and if carriers will reallocate the lost capacity on the trade is yet unknown, which may affect the projected figures. 
  Despite the decreases on the transpacific trade, the projected capacity in August will still see a slight year-over-year increase of 0.4 percent. It remains to be seen whether year-over year gains will narrow or dip into the negative over the coming months.