Demand, Capacity And Spot Rates Collapse By 46%

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Carriers are fighting to shore up falling spot rates from the Far East to US west coast, blanking some 1.5M TEU of capacity over the last 12 weeks.

But rates have collapsed by 46.3% over the same period, currently averaging US$4,150 per FEU (20 September). The latest data, released by Oslo-based Xeneta, highlights a shift in market fundamentals at what is usually a peak season for operators.

Xeneta chief analyst Peter Sand said, “This is the highest number of blanked sailings on this key trade since January and February, at a time when the industry would normally have anticipated very strong demand. It’s an aggressive strategic play by carriers, but it’s clearly not paying dividends.

“The last four weeks has seen capacity falling to its lowest levels since February, with an average of 275,000 TEU leaving the Far East for the US west coast, about 50,000 TEU less than the peak in early August. Compared with the same period in 2021, capacity is down by some 13%. That’s the equivalent of removing 21 ships of 8,000 TEU, which is the average vessel size on this trade.”

According to Xeneta, for 2022 to date, capacity offered on the route is more than 600,000 TEU down year-on-year (5.4%). The volume change is even more pronounced, with 700,000 TEU (source: CTS) less.

Mr Sand said, “Compared with the same period in 2019, capacity on this trade is up by 240,000 TEU, whereas demand is up by 890,000 TEU. So, relatively speaking, the trend is worrying for carriers, but the figures remain strong. That said, what has happened to ‘peak season’? It just doesn’t seem to have materialised, does it?”

A positive knock-on effect of the declining capacity is the improvement in scheduled reliability for vessels on the trade. Data shows that 27% of ships are now sailing on schedule, an 11% improvement over this point last year. The average delay for late ships is also down, currently standing at 9.6 days.

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Source: Riviera

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