Markets & timing
At the beginning of this year AAL started a monthly Europe–Middle East–India–Far East service. Christian Doepgen spoke to Eike Muentz, general manager for Europe, and Jan-Henrik Heyken, senior chartering manager for Europe.
How is your new service doing – considering these difficult market conditions?
Eike Muentz (EM): Despite the current market challenges, AAL’s monthly liner service has garnered significant interest in local European markets and beyond. We’ve been able to build a customer base within a short time. We have several mega-sized A class ships deployed on the service.
The market is tough and production lines and international cargo movements have declined rapidly since the start of the Covid-19 outbreak. Initially, the slowdown of imports and exports took hold in Asia, particularly in China, then Korea and Japan; then the virus spread across the Middle East, Europe and the USA, with the same pattern of decline mirrored everywhere worldwide.
Cargo freight rates have seen severe pressure downwards, with carriers facing fleet deployment at unsustainable levels.
What types of cargo does AAL carry on this new service?
Jan-Henrik Heyken (JHH): Rapid coronavirus-contagion measures have impacted major long-haul trade lanes and are causing a ‘geo-shift’ effect. Whilst the Chinese economy is slowly recovering, we’ve registered low cargo demand from its trading partners in Oceania, the Middle East, Europe and the USA. Despite this, we’re picking up eastbound and westbound project cargo, which is normally carried on tramp sailings.
In addition, the fact that we offer a monthly rotation on this route allows us to accept far smaller cargo parcels, and also to book them much earlier. This not only benefits both smaller and larger shippers alike, but simultaneously builds our dependability, as well as trust between the market and us. As part of these developments we also carry more steel cargo than we’d initially forecast.
What aspects of the service are proving most popular with potential shippers?
JHH: Our latest experience as well as that gleaned over the past 25 years of running liner services show that the main advantages of a liner service for the market lie in regularity and schedule integrity – a commitment to deliver a vessel along a route of base ports every month.
The service is further driven by a detailed schedule that is updated and distributed worldwide to our shippers every week without fail. It is additionally also posted onto social media, specifically to AAL’s 25,000 followers. This weekly exposure since the start of the service – as well as the fact that we work 24 / 7 to deliver our schedule commitments – is extremely important. It demonstrates that we can be relied upon.
What are your plans for the rest of 2020?
EM: We’ve invested 25 years of know-how in the service and the concomitant systems and process required, and it seems the market appreciates our effort and commitment. We’re always cautious and measure our ambitions against market conditions and timing, but we’re nevertheless pleased with the way the monthly Europe–Middle East–India–Far East liner service has started. Whilst the outbreak of Covid-19 is certainly something we as well as our customers have to face, the service is nevertheless running well and provides a vital service to the market.
As for the multipurpose shipping market, it’s hard to predict the short term, but certainly it will remain under pressure to a great extent. Recovery depends largely on markets’ ability to contain the spread of the virus, as well as significantly on the appetite of governments and financial institutions to support businesses with desperately-needed fiscal support policies. Of course our leaders also need to consider and deploy more relaxed international trading terms.
All being well, by the third quarter of this year we could see more stability in global markets and the re-emergence of trade flows. By the fourth quarter there could be growth, as markets recover and start to refill depleted stocks of goods, resources and commodities.
