Increased demand, coupled with vessels arriving off schedule is resulting in a capacity shortage in the sea freight market, creating operational challenges and driving up rates.
Shipping demand along the Asia-Europe routes has experienced a recent uptick, the rate of increase is not overly significant. However, given the hurdles of rerouting vessels to avoid the Red Sea, there isn’t sufficient additional capacity to accommodate this growth without disruption. Without vessels diverting around the Cape, the existing vessel capacity would more than adequately handle this increase.
Capacity Reduction
A significant portion of any surplus capacity that was in the market has been absorbed by diversions in the Red Sea. Carriers are deploying extra ships to navigate the Cape routing, while vessels are being delayed in Europe due to increased cargo volumes. These factors are diminishing market capacity. Space is becoming constrained due to vessels deviating from their schedules and returning to origin ports behind schedule. The additional time being allocated to servicing vessels is leading to longer rotations and impacting outbound traffic from Asia. The combination of reduced available space and heightened demand is causing rates to rise.
Operational Challenges
The arrival of vessels off schedule is causing a build up of cargo, thereby intensifying pressure on crucial hub ports. These challenges may create a knock-on effect with the potential to lead to equipment shortages. As a result, schedule integrity remains compromised as shipping lines struggle to maintain reliability, impacting sea freight schedules and resulting in delays.
Outlook
We anticipate a further increase in demand in the coming months. As vessels continue to deviate from their schedules, and with an outlook that does not signal improvement in the Red Sea crisis, we want to inform our customers that we are entering a challenging phase. It’s important to note that during May and June, the situation has the potential to worsen. While we anticipate delays and frequent schedule adjustments, we are committed to minimising disruptions and will provide regular updates to ensure you stay informed.
Should you have any questions or concerns about your shipment, please get in touch with our Customer Service Team on 01376 533039.
