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What do you think about the ongoing freight surge?

How Long Will the Ongoing Freight Rate Surge Last Amid Capacity Constraints in Transpacific route? In a dynamic turn of events, spot container shipping rates between Asia and the U.S. are experiencing an impressive surge in July, with double-digit growth for three consecutive weeks. This surge has propelled rates to levels reminiscent of early 2023 and late 2022.

The newfound discipline among shipping lines in managing vessel capacity is a significant contributing factor to this surge. Despite the usual correlation between higher demand and increased capacity, recent weeks have witnessed liners tightening their service offerings, particularly as demand sees improvements.

The constraints on capacity and limited space availability have compelled shippers to secure their bookings well in advance. This trend is predicted to persist throughout August, leading to continued rate escalation. Per market source, has reported a striking reduction of Asia-West Coast capacity by 15% this month compared to June, and a corresponding 8% to 10% reduction in Asia-East Coast capacity, which factors in the impact of Panama Canal restrictions.

The current year has seen the introduction of newbuildings with a capacity of 24,000 twenty-foot equivalent units, primarily catering to the Asia-Europe route. The influx of such capacity has led to falling rates in this sector. In contrast, the Asia-U.S. market has experienced comparatively modest capacity additions, hence the upward pressure on rates.

Recent data suggests a 12.1% decrease in Trans-Pacific deployments, while Asia-Europe capacity has risen by 7.6%. The market analysis anticipates a further widening of this gap in the coming months, as Europe continues to witness capacity additions while the Trans-Pacific market withdraws capacity.

According to market sources, project the bookings from U.S. imports are poised to maintain robust levels throughout August and well into the initial half of September.

The shipping industry remains in a state of intriguing flux, presenting both challenges and opportunities on the horizon.

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