Supply and Demand Disparity Hits Transatlantic

Credit: Ian Simmonds/Unsplash

Too much capacity is being injected into the Transatlantic tradelane, suggesting rates are likely to topple. The Transatlantic’s high of full ships and strong rates in 2022 has started to slip due to overcapacity, as carriers redeploy tonnage into the trade from other areas, reports Riviera Maritime Media.

2022 was the best year!

Atlantic Container Line (ACL) chief executive Andrew Abbott sums it up, “2022 was the best year in ACL’s history, it was unbelievable, and we have never experienced anything like that.”

Changing lifestyle patterns due to the pandemic helped to buoy the Transatlantic trade, although its boom was much smaller than the Asian trades. Mr Abbott explains, “On the Asia trade, volumes jumped because it is primarily a consumer products trade. During the pandemic, people stayed home and started buying stuff; they were fixing up their house rather than travelling, going out and doing things.”

The Atlantic does not have the percentage of consumer products as Asia, so the increased volume was more manageable, except for alcohol. People began drinking and partying more at home. Younger people in the US discovered spirits – Scottish and Irish whiskey took off.” This trend did not end with the pandemic, with Mr Abbott noting that while people are now going out again, they are continuing to party more at home.

A healthy demand on the Transatlantic, combined with a capacity shortage (carriers diverted any available ships to Asia to capitalise on the Asian boom), led to a very strong trade during 2022. Port congestion also played a role. Mr Abbott says, “The Atlantic picked up during 2021 and 2022 while most carriers were diverting hardware to Asia. Supply and demand balance shifted to the carrier side. In fact, there was a reduction in effective capacity as the port congestion delays caused most lines to lose voyages.”

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Source: Riviera Maritime Media


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