The Asia ocean freight market has always fluctuated between supply and demand, but right now the routing of vessels around Africa has led to a severe lack of capacity and equipment, driven by substantial pressure on supply.
Prior to the introduction of the new routings, services from Asia usually required around 12 ships to maintain a weekly service. However, the longer transit times means that number increases to around 15 for every service loop. The main alliance carriers operate up to 25 scheduled services during normal conditions, therefore as many as 75 extra vessels may have been needed to maintain supply.
Carriers often turn to the charter market to hire vessels when required, but with so many vessels needed, charter rates have gone through the roof. One major carrier agreed to pay a record $150,000 per day for a smaller 7,000 teu ship this month.
It is perhaps hard to believe, but the current Asia supply crisis could have been a lot worse than it currently is, if it wasn’t for new container ship builds. An unusually high number of new builds have entered the market during the past eighteen months, with vessels that were otherwise being replaced helping to fill the new schedule needs.
With up to 75 new ships being required, there’s a few hundred thousand containers needed to operate them, hence a severe shortage of container equipment has followed.
Most carrier’s order books are reportedly full to the brim with new ships and container equipment, which will naturally help ease the supply issues. Hopefully, that will start to come to fruition some time soon.
