While freight rates have been dropping consistently on most trades, they have remained elevated on the Transatlantic due to capacity issues.

In a new report, Sea Intelligence said this is about to change, as carriers inject serious amounts of capacity into the trade lane.

"From North Europe, capacity growth is scheduled to begin spiking from mid-December 2022, reaching a temporary apex at the end of the month, with capacity growth at 43% year-on-year," said Alan Murphy, CEO, Sea-Intelligence, adding that once we head into February, the current deployment indicates a capacity growth of 48%.

The Sea Intelligence report noted that compared to 2019 (pre-pandemic), from mid-December 2022, the operating capacity on North Europe-North America East Coast will shift from roughly the same level as in 2019 to 20% higher.

"As we get into mid-February 2023, this is poised to jump even further to 30%. However, this is not even the largest increase, as capacity from the Mediterranean will grow at an average of 25% over 2019 in January-February 2023," Murphy explained, adding that this is "at odds" 

"This is at odds with demand growth (or lack thereof ), as demand was down -3.4% Y/Y in Aug-Oct 2022, certainly not warranting the level of capacity injection currently planned," Murphy added.