Container carriers have increased capacity on major east-west trades out of Asia following months of supply chain disruption and sustained freight rate inflation, according to the latest market update from Xeneta.
The market intelligence provider reported double-digit week-on-week capacity increases across several key trade lanes. Offered capacity rose 10.5 per cent on Far East–US West Coast services, 12.1 per cent on Far East–US East Coast routes and 11.9 per cent on Far East–North Europe trades.
Peter Sand, Chief Analyst at Xeneta, said: “It has been a long time coming, but carriers have finally responded to spiralling spot rates and supply chain disruption on major ocean container shipping trades out of Asia by deploying significantly more capacity this week.
“This raises an uncomfortable question from shippers – why has it taken until now for carriers to act when they have endured months of triple-digit freight rate increases and delays in getting containers on board ships?
“Offered capacity on Far East to US West Coast is up 10.5 per cent from a week ago, US East Coast is up 12.1 per cent and North Europe is up 11.9 per cent. These are substantial weekly increases and the largest seen since the Strait of Hormuz closure at the end of February.”
READ: Xeneta warns shippers as spot rates surge 80 per cent
Xeneta said carriers are increasing capacity ahead of the traditional peak season beginning on 1 July, while also responding to sharp freight rate increases linked to ongoing disruption following the escalation of conflict in the Middle East.
Since the end of February, spot rates on the Far East–US West Coast trade have climbed 214 per cent.
Rates to the US East Coast have risen 176 per cent, while Far East–North Europe and Far East–Mediterranean services have increased 115 per cent and 82 per cent respectively.
Despite the additional capacity, Xeneta expects upward pressure on freight rates to persist.
READ: Xeneta warns of further freight rate surge
Sand stated: “For shippers, more capacity is always welcome and will help them to get supply chains moving more reliably, but they should not expect this to translate into falling freight rates.”
The analyst also noted that container shipping activity through the Strait of Hormuz remains limited despite an increase in overall vessel movements.
According to Xeneta, seven containership transits were recorded on Wednesday, with only one vessel entering the Arabian Gulf.
Sand said: “Carriers need a safe, permanent corridor before they will commit networks and we are not there yet.”
As of 25 June, average spot rates stood at $5,909 per FEU on the Far East–US West Coast trade, $7,313 per FEU to the US East Coast and $4,763 per FEU on Far East–North Europe services.
For more information:
Xeneta – https://www.xeneta.com/
