Date: Friday, July 7, 2023
Source: Container News
The peak season in the container shipping market should already be getting underway under normal circumstances, but, according to Danish maritime data analysis firm Sea-Intelligence, it has not started yet.
The following figure shows the four-week average capacity deployment (future based on currently scheduled capacity by the carriers) for Asia-North America, combined Asia-North America West and East Coasts.
"What is really concerning is that capacity is on track to grow more than 20% as we approach the later stages of the, presently invisible, peak season," pointed out a Sea-Intelligence analyst.
At the same time, a similar trend is seen on Asia-Europe, where capacity growth is currently scheduled to cross an even higher 40% mark.
"The market has certainly been here many times in the past – the cyclical nature of shipping makes it inevitable that capacity injection at times will exceed demand growth," commented Alan Murphy, CEO of Sea-Intelligence.
He went on to note, "But it is not a law of nature, that this should necessarily tank the market. The carriers have the ability to manage capacity, even in the face of a large supply/demand discrepancy."
The developments in spring 2020 clearly showed this.
"The ball is right now very much in the carriers’ court. Their current planning will certainly result in a sharply worsening market balance, and likely continuing declines in freight rates – something which could lead to loss-making territory in 2nd half 2023. But this can be avoided by tactical use of blank sailings. Some of the idle capacity might then be sent to yards to get retrofitted for (even more) slow steaming, in preparation for the tightening environmental regulations," explained Murphy.