Carriers vow to flex capacity to keep freight rates stable, despite anticipation of new ships and worsening economy

Having navigated the effects of the COVID-19 pandemic, which saw significant drops in container volumes in 2020, carriers have shown a willingness to adjust capacity to demand, skipping sailings to keep utilisation and rates elevated. Port congestion and equipment shortages have also contributed to keeping rates up, with current spot rates from Asia to the US West Coast at $7,930, and trans-Atlantic rates from North Europe at $6,593, both figures up significantly from the previous year.

Despite an expected 8.5 percent growth in global fleet capacity in 2023, which might suggest an incoming fall in rates, carriers note there’s still an insatiable demand for capacity and that the influx of new ships will be balanced with the phasing out of older, less environmentally friendly ships. Executives say there’s a strong incentive to retire older tonnage and develop greener operations, with big customers like Walmart and Amazon expecting carbon neutrality from service providers by 2030 or 2040.

Source:
1. Capacity management will stabilize rates despite growing orderbook: carriers, Journal of Commerce, May 19, 2022. Accessed June 20, 2022.