As stated by the international shipping organization BIMCO, during 2024 a total amount of 478 container ships with a capacity of 3.1 million TEU is scheduled for delivery and container fleet nominal capacity is expected to grow by 10% in a single year. However, recent forecasts highlight that global container volumes will grow just between 3-4%, pushing up overcapacity.
On the other hand, Red Sea crisis is rapidly affecting global capacity. As Chart 1 shows, the number of transits of containerships via the Cape of Good Hope has exceeded Suez Canal transits since week 51 of 2023. Nowadays, all global liners have rerouted their vessels via South Africa and the Suez Canal is crossed just by a few small Chinese operators connecting China and East Med in exchange for premium seafreights.
In a few words, the increased trade distances related to the Cape of Good Hope transits (approximately 3.000 nautical miles per voyage) will significantly help ocean carriers reducing, at least in the short run, overcapacity. As stated by the European think tank Drewry, Red Sea crisis is expected to suppress the forecast increase of effective capacity. In just a month Drewry forecasts on 2024 effective capacity for container liners have collapsed from 9.3% to 5.3%, which is quite similar to BIMCO forecasts regarding container throughput increase. Another KPI underlining the recent logistic disruptions is Global Schedule Reliability, updated on a monthly basis by Sea-Intelligence. In December 2023 container reliability was hit by the largest M/M drop since February 2021, with -5.0 percentage points to 56.8% (Sea-Intelligence – Schedule reliability drops -5.0 percentage points in December).
Chart 2 underlines the effects of the Red Sea crisis on seafreights from Asia to Northern Europe/Mediterranean: since major container carriers announced they would avoid Suez Canal (15 December) spot rates increased more than 250%, especially from China to the Med Area.
Mediterranean ports, especially eastern ones, are expected to suffer the most from recent shipping disruptions, since transit times from China have skyrocketed to more than 50 days thanks to longer distances and updated vessel routes.
In the end, last-day updates suggest that spot rates from Far East are already softening, as ocean carriers have rapidly rerouted the involved vessels deploying all the additional available additional capacity, suggesting that seafreights will stabilize until other geopolitical updates.
RedSea containercapacity #2024 SuezCanal
