Recently, ocean three alliance has witnessed withdrawing one of its loops for three months temporarily in the month of July. O3 has just thrown a trial of termination for some time to estimate the cargo balance whether it will go smooth or not. After observing for three months, CMA CGM this week, announced that as a partner of ocean three alliance which include China Shipping and UASC, it is going to terminate one of its Asia-Europe cargo services completely from October due to increased contain ship fleet capacity. It is revealed by a French carrier that CMA CGM along with other partners of three alliance is thinking to combine FAL2 and FAL3 into a single one to tackle the current market situation between Asia and Europe. It means the two loops FAL2 and FAL3 are going to combine into a single service by rationalizing their qualities together and newly transformed as FAL23. This was proposed by CMA CGM and the newly formed carrier cargo service will is going to offer optimized rotational service meeting the customer needs and expectations. This new terminal has additional direct call facility at Cai Mep International Container Terminal (CMIT) which is at Vietnam. Previously FAL2 and FAL3 used to have Xiamen and China call which are now transferred to FAL8 schedule.
Ocean Three Alliance was the first one to announce the withdrawal of a cargo service loop for a certain period of time going against the policy of ad-hoc blanked sailing. It is a strategy adopted by carriers for mitigating the impact of seasonal weak demand. Initially, it was termed as a wrong decision by analysts since the alliance has terminated peak season capacity during which it should act strongly. But later observed other alliances also following the same route. It is revealed from Alphaliner at a certain time that ocean three alliance will be forced for diminishing the capacity permanently as there is no improvement seen in the operational profits of cargo service by the end of September. From the sea cargo news report 2015, it is observed that even peak season has recorded low profits disappointing the carrier companies. In addition, falling freight rates and frequent failures of general rate increases have shown their impact on cargo demand.
Present there are 13 vessels operating under FAL2 which are supplied by ocean three alliance members leaving the supply gained from ships having an average capacity of 14,000 teu. While FAL3 has 12 ships which are operating under supply of CMA CGM having an average capacity of 12,000 teu. If the combined FAL23 loop cargo service comes into existence, about 46,000 teu vessel capacity is estimated from all the three loops of Asia-Europe cargo service, which is less compared to 58,000 teu of all the four loops. With the newly formed FAL23 loop, 36 vessels are going to operate under ocean three alliance providing cargo services with total 49 ships and some more container carriers will be added soon. It is from latest report of Alphaliner that a sudden hike in capacity is seen with 100,000 teu adding the new container tonnage which is a new hike recorded in 2015 as all the size sectors are highly suffering from weak demand. It is reported as 500,000 teu representing 2.5 percent global vessel capacity of total 175 vessels. Among them, 73 percent are non-operating owners and are failed to find charters.