To consolidate its position on intra-Asian trade routes, shipping company CMA CGM is planning to deploy three vessels to operate a unique "butterfly" network through an alliance of six regional shipping companies.

    The service network consists of two routes, named VGI, designed to connect the internal Asian markets of India, the Middle East, Malaysia, Vietnam, Thailand and Singapore.

    The ship sharing agreement includes three vessels from Emirates Shipping Line and one vessel each from PIL, RCL Feeder, KMTC, CU Lines and Global Feeder Shipping. These ships have a capacity of between 4,000 and 6,000 TEU.

    The VGI-1 will call at the ports of Laem Chaban, Singapore, Port Klang, Nawa Sheva, Jebel Ali, Daman and back to Nawa Sheva, Port Klang and Tau Tau. The maiden voyage was carried out by Zhong Gu Shen Yang from Lam Chabang on the 16th.

The VGI-2 route called on the first leg of the voyage to VGI-2, Jakarta, Port Klang, Mundra, Jebel Ali, Daman, and then back to Mundra, Port Klang and Laem Chabang, with ESL Kabir arriving at VGI-2 on 19 May for its maiden voyage.

Cma CGM said the VGI network provides competitive transit times and is designed to serve the rapidly growing import and export needs of the Southeast Asian market. In particular, through direct flights to Jebel Ali and Dammam, customers will be able to more easily access core markets in the Middle East and further expand to other ports through feeder services.

    According to industry sources, apart from intra-Asia cargoes, alliance members can also opt for Gulf cargoes exported from Jebel Ali or Dammam to be transshipped at hub ports such as Port Klang and Singapore, thereby expanding the range of services.

Cma CGM already connects some of its Gulf cargo to Colombo via feeder lines, but capacity issues at the hub port in Sri Lanka have raised serious concerns among shipping companies. ENNORE Port on India's east coast has also recently experienced operational problems, mainly due to overloading of trans-shipment tie-ups diverted from Colombo.

    Still, for intra-Asian service tie-ups at Indian ports, return freight is more attractive. Stable freight volumes have kept ocean freight rates positive in recent months. According to market sources, shipping companies are now able to sell Singapore to Nava Sheva slots at $800 per TEU and $1,100 per FEU, up from $750 and $900 a week ago.

    An executive of a major freight forwarding company in Mumbai noted that trade between India and the East coast of the United States has recently experienced a severe price shock due to the new WIN service launched by ONE, which has greatly disrupted the market. The executive further stressed that unless there is a significant improvement in demand conditions, the prospects for a recovery in freight rates seem quite difficult.

According to sources, booking prices from India to the East Coast of the United States dropped significantly in May compared to April, specifically by about $1,600 /TEU and $2,000 /FEU.

    Sources believe that traditional market leaders such as Hapag-Lloyd, CMA CGM and MSC may need to rework their operational strategies to meet the challenges.