Singaporean shipping group Neptune Orient Lines (NOL) announced a series of capacity cutbacks in response to global financial downturn, severing a number of services operated by its APL subsidiary.

NOL, the world’s seventh largest container shipping ling, will drop 25 per cent of traffic on the Asia-Europe route and 20 per cent on the trans-Pacific route.

The company also said it would suspend the Pacific South Express 3, Pacific South West, China Europe Express and Singapore Subcontinent Express services, expanding some other routes to cover the cutbacks.

The capacity drop is expected to be the first in line of similar shipping reductions as trade slows and demand for container shipping thins out, according to The Journal of Commerce Online.

“The traditional seasonal softening of demand in the main container trades has been compounded by the global financial crisis and economic slowdown,” said APL’s president Eng Aik Meng.

Credit ratings agency Standard & Poor’s said in a report released on Tuesday the Asian shipping market had seen dramatic deterioration over the past few months.

“Reflecting the economic slowdown in the US, trading volumes from Asia to North America posted double-digit declines in June and July. Most trunk route container operators are suffering from severe earnings deterioration as a result of lower cargo volume and higher operating costs,” the report said.

The shipping lines’ financial troubles have been aggravated by an influx of new container ships coming online, ordered before the decrease in demand.

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