Container lines fighting losing battle on capacity

Container lines are fighting a losing battle to inject sufficient capacity into the market as schedule delays absorb the huge amount of additional tonnage that has already been deployed on key trade lanes.

“Despite data from CTS showing a very modest global demand growth, and only a genuine demand boom into North America, most freight rates continue to set records and shippers find themselves in a situation of fighting over available capacity,” said Sea-Intelligence chief executive Alan Murphy.

“The current predicament is driven in the main by lack of capacity and not by a demand boom.”

In practical terms, a carrier offering a weekly service using 10,000 teu vessels on the transpacific would need six ships for the six-week round trip. But if this were delayed by a week due to port congestion at either end of the voyage, an additional vessel would be required to maintain the same capacity.

“This means the carrier de facto needs to increase nominal capacity by 16.7%, simply to maintain the same weekly capacity,” Mr Murphy said.

“The effect of this is exactly the same as if the market demand had increased 16.7%, as that would have required the same injection of net capacity in the market.”

Source:Lloyd”s Loading List

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