CARRIERS have been taking out significant levels of capacity weekly on the Asia-North American West Coast tradelane in the weeks following China's Golden Weeks (weeks 41-43), according to a Sea-Intelligence news release.
It said the level of blanked capacity was not only higher than in 2019 but had also increased from what was scheduled 3 weeks ago in the outlook from week 37.
However, even with an average (over weeks 41-43) 26 per cent to 31 per cent capacity reduction on the Transpacific and 19 per cent to 27 per cent capacity reduction on Asia-Europe, freight rates on these trades continue to fall considerably.
Alan Murphy, CEO, Sea-Intelligence, explains why rates are to continuing to fall: 'The simple answer: because carriers added so much capacity during last year, that even with these levels of capacity reductions, the underlying capacity has still only been brought in line with 2019.'
For weeks 41-43 in 2022, Asia-North America West Coast is scheduled to see capacity grow by 1.9 per cent when annualized over 2019, while Asia-North America East Coast and Asia-North Europe are slated to see even larger capacity increases, of 3.1 per cent and 5.1 per cent, respectively. Only Asia-Mediterranean is contracting, by -1.3 per cent.
So, can carriers really blank more capacity to try and control the freight rate drop?
'The peak reductions during the initial Covid impact were 35 per cent to 53 per cent, but that lasted for only 1-2 weeks, before capacity reductions dropped to 10 per cent to 30 per cent for a few more weeks. Carriers are already within the latter range now, and a 50 per cent reduction in deployed capacity, will not only create significantly more supply chain problems, but will also likely have the cargo owners up in arms, said Mr Murphy.
'There is a very delicate balancing act for the carriers to follow from here on.'
SeaNews Turkey
It said the level of blanked capacity was not only higher than in 2019 but had also increased from what was scheduled 3 weeks ago in the outlook from week 37.
However, even with an average (over weeks 41-43) 26 per cent to 31 per cent capacity reduction on the Transpacific and 19 per cent to 27 per cent capacity reduction on Asia-Europe, freight rates on these trades continue to fall considerably.
Alan Murphy, CEO, Sea-Intelligence, explains why rates are to continuing to fall: 'The simple answer: because carriers added so much capacity during last year, that even with these levels of capacity reductions, the underlying capacity has still only been brought in line with 2019.'
For weeks 41-43 in 2022, Asia-North America West Coast is scheduled to see capacity grow by 1.9 per cent when annualized over 2019, while Asia-North America East Coast and Asia-North Europe are slated to see even larger capacity increases, of 3.1 per cent and 5.1 per cent, respectively. Only Asia-Mediterranean is contracting, by -1.3 per cent.
So, can carriers really blank more capacity to try and control the freight rate drop?
'The peak reductions during the initial Covid impact were 35 per cent to 53 per cent, but that lasted for only 1-2 weeks, before capacity reductions dropped to 10 per cent to 30 per cent for a few more weeks. Carriers are already within the latter range now, and a 50 per cent reduction in deployed capacity, will not only create significantly more supply chain problems, but will also likely have the cargo owners up in arms, said Mr Murphy.
'There is a very delicate balancing act for the carriers to follow from here on.'
SeaNews Turkey
