Ocean liners are continuing to deal with overcapacity amid a persisting lack of demand, and a report from Danish maritime data analysis firm, Sea-Intelligence, pointed out that this imbalance could spillover to next year and further drive rates down.
The report analysed post-Golden week capacity deployment on Transpacific and Asia-Europe and noted a "substantial overcapacity" on both trades.
"Absent any serious demand growth, we expected that the carriers would announce a host of blank sailings to counteract this supply-side growth," Sea-Intelligence said.
It noted, however, that four weeks on, hardly any new blank sailings have been announced, and capacity growth for the remainder of 2023 is still "quite excessive."
Figure 1 shows a summary of these growth figures based on the latest vessel deployments (as of Week 46, 2023).
Citing the figure shown, Sea-Intelligence noted that this is for the last 10 weeks of 2023 (Weeks 42-52), net of the growth in 2019, as well as net of the average growth across 2016-2019.
"What this means is that Figure 1 does not show what the actual growth looks like but how much higher it is compared to the pre-pandemic years," said Alan Murphy, chief executive officer at Sea-Intelligence.
He noted that depending on whether the capacity growth post-Golden Week 2023 is compared to the same time in 2019 or to the average growth of 2016-2019, Asia-North America West Coast is up by 16%-25%, Asia-North America East Coast by 22%-32%, Asia-North Europe by 8%-11%, and Asia-Mediterranean by 36%-38%.
"These are all unsustainable capacity growth figures," Murphy added.
With six weeks to go to the end of 2023, Sea-Intelligence offered two possibilities of how the scenario would play out for the shipping industry.
"Either the carriers announce a massive blank sailings program between now and the end of the year, which will reduce capacity but will not go down well with the shippers as it will leave them scrambling to manage these sudden supply-side disruptions," he said.
"Or the carriers ride this wave of high capacity injection and the likely downward pressure on freight rates into the new year and compensate for it during Chinese New Year."