Capacity management for ocean freight carriers on Asia routes is being stretched right now, as the longer transit times via The Cape Of Good Hope require more vessels. However, when the Red Sea crisis comes to an end, which it surely will, we could be set for a period of over-capacity.
A recent report in The Loadstar suggested that right now carriers are short of the capacity required to adequately supply the current route by around 400,000 TEU. The longer transit times, of between 10 and 14 days in each direction, require more vessels to operate.
In fact, on every one of the numerous loops from Asia, between 3 and 4 vessels are required to maintain regular weekly schedules. This has largely been covered by the arrival of record numbers of new build containerships in the past few months.
Last year, new builds were being delivered to carriers at an incredible rate, which has continued into the first couple of months of this year. New vessels that can carry a combined total of 200,00o TEU arrived in February, which followed a record 300,000 in January.
New ships have clearly helped carriers manage the temporary need for extra capacity on the Cape Of Good Hope route, but it is unclear what carriers will do with the extra capacity when it is safe to passage back through the Red Sea.
If the crisis was to end in the near future, and carriers returned to the Suez canal route, we can only assume that there will be massive over capacity in the market, as overall demand from Asia is not as strong as it was pre-pandemic and there are many more ships in service.
There could be some major challenges ahead for carriers and their capacity management.
