Rising capacity concerns amid peak season

Crucial capacity challenge is approaching

According to the most recent Sea-Intelligence data, shipping operators’ ability to control capacity appears to be a concern for the future.

When looking at the four-week average capacity deployment for Asia-North America, Sea-Intelligence found that capacity is on track to grow more than 20 per cent, as peak season is steadily approaching.

READ: Asia-Europe carriers outpace Transpacific in capacity planning

A similar tendency can be seen in Asia-Europe, where capacity growth is now expected to exceed 40 per cent.

© Sea-Intelligence

According to Sea-Intelligence, the industry has been in this situation previously since the cyclical nature of shipping makes it inescapable that capacity injection would frequently surpass demand growth.

READ: Decline in US-Asia imports challenges global container recovery

However, it is not a natural rule that this will inevitably cause the market to crash, as Alan Murphy, CEO, Sea-Intelligence, explained: “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 the second half of 2023.

“But this can be avoided by tactical use of blank sailings.”

In May 2023, Sea-Intelligence reported that US ports witnessed a greater impact during the pandemic than the global average in terms of median port time.

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