Via Zerohedge

Growth in the world continues to collapse into late summer, so much so that Maersk and Mediterranean Shipping Company (MSC) had to “temporarily suspend” their AE2/Swan Asia to North Europe loop until mid-November, removing 20,000 twenty-foot equivalent unit (TEU) a week from trade, reported The Loadstar.

Collapsing demand and plunging shipping container rates have led to pain for carriers who sail their vessels along the route. This is the second time Maersk and MSC have suspended the circuit, and the last time this happened was last fall.

Maersk and MSC said it’s working hard to “balance its network to match reduced market demand for the upcoming [Chinese factory shutdown] Golden Week.”

Maersk and MSC said the AE2/Swan suspension would “help us to match capacity with the expected weaker demand for shipping services” from Asia to Europe.

Maersk and MSC said the service would resume “in line with demand pickup,” suggesting the suspension could be extended into 1H20 as global trade isn’t expected to pick up for the next six to eight months. 

Maersk and MSC adopted a similar strategy last year, suspending AE2/Swan Asia to North Europe loop from September to December, this was right around the time when stock markets across the world crashed from October to December, on fears the world economy was slowing. It just so happens that the global synchronized slowdown is much worse this year, likely the world has entered a manufacturing/trade recession in late summer 2019.

The suspension of AE2/Swan loop will see 12 17,800-20,500 TEU vessels idled for the next several months. 

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The last time the AE2/Swan loop was halted, it was during the period when world stocks collapsed last fall.

Freightos freight data for China to Europe 40 ft shipping containers shows muted price recovery over the last several years.

Global rates for 40 ft shipping containers also show depressed prices, which usually means global trade is weak.

As for global trade, the Merchandise World Trade Monitor by CPB Netherlands Bureau for Economic Policy Analysis shows peak globalization in 2017 and 2018, and the index is now sliding for the first time since the financial crisis.

It should be no mystery why the world’s largest shipping companies are idling vessels – it’s because a global recession has likely started.

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