While the Transatlantic Westbound is known as a rather stable trade, freight rates have been soaring to unprecedented levels over the past 6 weeks as capacity cannot cope with the pace of demand. As there is no immediate relief in sight to the capacity issue and demand for US imports is projected to increase, the trade will remain hot in the mid-term.
The six-day-long blockage of the Suez Canal due to the grounding of vessel mv EVER GIVEN in March, added more disruption to Far East and Transatlantic schedules, which by February 2021 had already hit their lowest vessel on-time-performance ever recorded on the two Westbound trade lanes (27.2% and 23.9% respectively)*.
The ensuing port congestion in North Europe does not only cripple ship capacity and schedule reliability. But also container usage time is significantly increased as equipment remains tied up on ships queueing at port. The high-volume influx of cargo stretches barge, rail and truck availability on the landside, resulting in extended dwell and transit time and adds to the container usage time.
As the aftermath of the Suez Canal incident unfolds, the main sore point for the Transatlantic Westbound will be equipment availability. Carriers don’t have enough boxes to make up for the slowdown in the repositioning of empties and prioritize containers to be returned to Asia, where backlogs of higher-paying cargo have built up. Because the Transatlantic trade is dominated by westbound cargo flows, the supply of containers coming from the backhaul route is limited and must rely on Asia-Europe services to provide a steady equipment flow. This will cause equipment shortages to continue in the coming weeks, which will add further pressure on freight rates.
*Source: Sea-Intelligence Maritime Analysis, Global Liner Performance Report – March 2021
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