Given the recent decline in spot rates, maritime data analysis company Sea-Intelligence looked into the question' is the downward pressure of spot rates caused by supply or demand?' The company used timely and long-term supply-side data to see if there has been a surprising surge in deployed capacity, which could explain this decline.
The above figure shows both the year-to-year capacity growth and the annualized capacity growth (versus 2019) for Asia-North America West Coast, while figure 2 shows the same for Asia-North Europe.
"For the Asia-North America West Coast, the developments are quite curious," said Alan Murphy, CEO of Sea-Intelligence. Capacity growth could have made a case for falling spot rates, but given that annual growth has been below 5%, it appears that the current downward trend is due to a reduction in the demand side.
"This in itself should be quite worrying for the carriers, especially as we are headed into the traditional peak season. This is possibly an indication that the market is not as strong as expected," Murphy continued.
Indeed, even in Asia-North Europe, both sets of measures of capacity growth are hovering around the 0% mark, indicating that the downward pressure on spot rates is not due to supply but rather because the market is not as strong as originally expected for the 2022 peak season.
Source: container-news.com