Carriers juggling capacity and port congestion

Shipping’s response to the Red Sea crisis is to reduce capacity to an extent far exceeding expectations, leading to a situation in Europe for Asia-Mediterranean traffic not seen since the pandemic, according to some analysts.

According to Xeneta, new transhipment networks, meant to reduce the impact of Red Sea diversions, are instead adding to it by creating congestion. Deploying more smaller vessels has contributed to an increase in wait times.

The Loadstar recently reported that carrier giants such as Cosco and Evergreen were redeploying tonnage purpose-built for the Far East-North Europe trades to the Mediterranean in the hope of stemming under-capacity there.

“If we focus on the first 14 weeks of 2024, capacity on Asia-Med is up by 8% year on year already, whereas it’s down 3.1% on Asia-North Europe,” Xeneta’s Peter Sand told The Loadstar recently.

“West Med transhipment ports are as busy as ever, and may already be exceeding peak productivity levels,” he continued. “The port of Barcelona handled 48% more transhipment teu in Q1 24 than last year. According to Xeneta data, we can clearly see the attractiveness of this trade, from a carrier perspective.”

The additional attention is having a knock-on effect on wait times, which at Barcelona have increased to 3.53 days. According to Xeneta’s short-term market averages, rates from Singapore to Barcelona were climbing again, from a lull in March, up 10% at the beginning of this month, close to levels last seen at the outset of Red Sea diversions in January.

A customer note from a UK forwarder last week gave a dire indictment of the current scenario. It said: “With demand higher than forecasted, there is a realisation we have entered an extremely challenging period, not seen since the dark days of the pandemic. We anticipate this is likely to continue into Q3, where there may be some respite from new capacity coming into the market.”