Fighting For Profits, Shipping Companies Are Vying To Put Capacity On Trans-pacific Routes! In This Way, The Freight Rate Will Continue To Rise

Shipping companies continue to shift their capacity from intra-Asia and North-South trade routes to the more profitable east-west trade routes, which in turn pushes up the freight rates of the east-west trade routes and threatens the sustainability of the global shipping market.

Alphaliner said its data shows that the trans-Pacific route between Asia and North America has attracted the most additional capacity in the past few months. According to its consultants, the additional capacity has increased substantially. “There are currently more than 30 ships between the Far East and the west coast of North America.”

Although the carrier needs more ships to reduce the impact of port congestion, it is obviously more attractive for the carrier to deploy additional load ships between Asia and the United States, because in a very one-sided seller’s market, a huge premium can be obtained. Benefit from it.

Alphaliner’s data shows that in the past 12 months, the capacity of Asia and North America routes has increased by 30.6%, and the capacity of Asia-Europe routes has increased by 19.7%. In contrast, the carrier’s capacity deployed on the African-related service network has been reduced by 6.5%, and a British freight forwarder said it is now “almost impossible” to obtain equipment for its customers’ products exported in Africa. “They are not interested in the African export business. They just want to ship the boxes back to Asia, and then handle the goods worth US$20,000 per cabinet.” He said.

According to Alphaliner, on trans-Pacific routes, capacity growth is not evenly distributed by all shipping companies. Among the 30.6% growth of the Asia-North America route, the weekly average capacity growth of 5 routes exceeded the market average.

“2M partners Maersk (+50.4%) and MSC (+81.7%) have added the most shipping companies to trans-Pacific trade routes, and both have started or announced additional voyages and services beyond the scope of the ship sharing agreement.” Alphaliner said. At the same time, Wanhai’s capacity increase on the trans-Pacific route (calculated in proportion) has exceeded that of its competitors. Due to the introduction of four independent Asia-U.S. West Coast routes and one Asia-U.S. East Coast route, the increase in capacity of this route is as high as 2615%. According to Alphaliner’s data, 32% of Wanhai’s 148 ships and 419,000 TEU fleet are now deployed on the service network between Asia and North America.

“Yixing is another operator that has launched a new service for cross-border e-commerce from Asia to the West Coast of the United States. Its average weekly capacity has risen from 18,450 TEU to 25,259 TEU within 12 months, an increase of 37.4%.” Alphaliner said.

Redeploying ships to more profitable routes is a win-win situation for carriers. After transferring ships, they will be able to obtain higher interest rates on east-west trade routes where capacity is tight. An example is the transatlantic route. Earlier this year, shipping companies transferred as much capacity as possible to the two largest trade routes. For example, 2M suspended its Nordic-U.S. East Coast TA4/NEUTL4 route in April.

The demand for air routes is growing rapidly. Therefore, since March, the spot freight for a 40-foot container from Northern Europe to the east coast of the United States has soared from US$2,000 to US$6,000, and the carrier now also requires the shipper to pay additional fees to guarantee the equipment and transportation.