The Panama Canal transit restrictions have not stopped carriers from adding 20% of incremental capacity on the Asia-US East Coast route since the end of August, with the average capacity deployed over the last five weeks reaching 246,000 TEUs, compared to 204,000 TEUs in the preceding five weeks, according to Linerlytica’s latest report.
Capacity utilisation has slipped to 85%, as freight rates have fallen by US$1,000 since then, to about US$2,1000/FEU today (19 September).
The Shanghai Containerised Freight Index (SCFI) showed that as of 15 September, Asia-US East Coast rates averaged US$2,550/FEU, down 11% from the previous week, while Asia-US West Coast rates lost 7% to US$1,888/FEU.
However, Linerlytica remarked, “Transpacific freight rates are eroding rapidly, with carriers slashing rates on both the West Coast and East Coast by as much as US$500 below the current SCFI assessments. There is little hope of a rate rebound over the October holidays in China despite the increase in the number of blank sailings that will mostly hit Asia last port departures on week 41, with up to 40% of the weekly capacity removed. The lack of permanent capacity cuts will continue to put pressure on transpacific rates.”
Early this year, due to lower water depths amid the El Nino weather phenomenon, the Panama Canal Authority began imposing load limits on ships transiting the canal. This compelled vessel operators to transit the canal with reduced cargo volumes. On 24 August, the canal authority extended the load limits by another 10 months.
Although carriers have cancelled 40% of the sailings in week 41 to coincide with vessel departures after the Golden Week holidays, the supply overhang remains a challenge with carriers unwilling to forego market share.
There remains insufficient capacity idled while scrapping of older ships continues at snail pace at less than 10,000 TEUs a month even as new ship deliveries exceed 200,000 TEUs.
Martina Li
Asia Correspondent
