The impact of vessel delays is ‘by far the largest single element’ causing the severe capacity shortage driving up freight rates in the market presently, said analyst firm Sea-Intelligence
In its Sunday Spotlight, it looked at the impact of the delays on deployed container ship capacity.
To investigate this, Sea-Intelligence followed a “simple approach”. It gives the example of a carrier offering a six-week roundtrip service with six 10,000-TEU vessels, which are now five days late on the head-haul and two days late on the back-haul. The round-trip increases to seven weeks, requiring an additional 10,000-TEU vessel to compensate for the delay-induced loss of capacity.
To maintain the same weekly capacity, the carrier de-facto needs to increase nominal capacity by 16.7%. Sea-Intelligence said the effect of which is the same as if market demand had increased by 16.7%.
Sea-Intelligence looked at the transpacific capacity the carriers had committed to the market and the additional capacity carriers would have to inject to deliver that actual capacity.
Sea-Intelligence chief executive Alan Murphy said, “In percentage terms, since the start of 2021, carriers have had to deploy more than 20% more nominal capacity than usual, simply to offer the same weekly capacity.”
Sea-Intelligence examined the development of actual cargo-carrying capacity, when compensated for the delay effect. Mr Murphy highlighted the results, “We can clearly see that irrespective of whether we measure year-on-year or compare it with 2019, the net capacity development is negative. This means despite the factual injection of significantly more vessels into the transpacific, the cargo-carrying capacity on a roundtrip-basis measured in TEU days has actually declined. We see a similar impact on Asia-Europe”.
Mr Murphy warned, “Building more vessels will not materially solve the problem – partly because vessels ordered today mainly get delivered in late 2023 and in 2024, and partly because injecting more vessels compounds the bottleneck problems in ports, effectively increasing the delay time.
“The resolution has to come from solving the congestion problems on the landside. This does not only imply solving the congestion in the ports, but also the hinterland infrastructure related to trucks, chassis, rail, etc.”
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