2M Alliance suspends Sequoia/TP3 service

The US West market has been falling in volume and price for some time now and liner companies have had to respond.

The 2M Alliance (MSC and Maersk) has announced the suspension of its Sequoia/TP3 service in the US West due to "reduced demand in the US West market over the last few weeks".

Mediterranean Shipping Company (MSC), a member of the 2M Alliance, said that it would take steps to rebalance its capacity in view of the "significant reduction" in demand in the US West market, and that the suspension was one of those steps.

After the suspension of the Sequoia/TP3 service, the original cargo on the route can be transported through the 2M Alliance's Jaguar/TP2 service.

It is understood that Sequoia/TP3 service was officially launched in December 2016, between Ningbo, Shanghai and Los Angeles, providing express service with the deployment of 11,000 TEU type container vessels. Meanwhile, 2M Alliance has also signed a 10% slot charter agreement with SM Line.

The Shanghai Export Container Composite Freight Index (SCFI) released by the Shanghai Shipping Exchange showed that the market rate (ocean and ocean surcharges) for exports from the Port of Shanghai to the basic ports in the US West was US$2,684 per FEU on September 23, down 12% from a week earlier. Compared with US$5,134/FEU in late August, the drop was as much as 47.7%.

Meanwhile, the Port of Los Angeles, the number one container port in the US, saw container throughput of 805,672 TEU in August, down 15.5% year-on-year. Of this, 404,313 TEU were imported containers, down a whopping 16.8 per cent year-on-year and also down 16.7 per cent sequentially. The Port of Los Angeles said this was the lowest monthly import container volume at the Port of Los Angeles since December 2021. 



Against the above backdrop, more liner companies, in addition to the 2M Alliance, are adjusting their capacity in the US West market.

Just recently, Maatson suspended its seasonal CCX service due to the plummeting spot market rates. (read more: Matson to Discontinue CCX Service | Last China Voyage)

There is also news that CMA CGM will also suspend its Golden Gate Bridge service. GGB service is calling at Shanghai, Yantian, Auckland, Seattle, Kaohsiung and other ports, with seven vessels of 5,000TEU to 11,000TEU operating. (read more: CMA CGM to Discontinue GGB Service)

In response to the recent market changes, Alphaliner analyzed that the decline in cargo volumes and freight rates is forcing liner companies to continue to reduce capacity in the US West market.

Alphaliner further said that with China's "October 1st National Day" holiday approaching and the "overall sluggish outlook for the container market" ahead, liner companies are likely to make further capacity cuts in the coming weeks.

Maersk's latest report on the Asia Pacific market, published in September, also said that the "increasingly pessimistic" economic and trade outlook was creating strong headwinds for the consolidation market as the US and European economies slowed sharply.

Maersk said that recent data shows that regional container growth rates are falling, with some major regions even experiencing negative growth, and container freight rates have also fallen sharply.