It has been a long time coming, but carriers have finally responded to spiraling spot rates and supply chain disruption on major ocean container shipping trades out of Asia by deploying significantly more capacity this week, said Peter Sand, Chief Analyst at data and intelligence firm Xeneta in a June 25 Ocean Container Shipping Market Update. 

“This raises an uncomfortable question from shippers: Why has it taken until now for carriers to act when they have endured months of triple-digit freight rate increases and delays in getting containers on board ships?” Sand commented.

Extra capacity does not necessarily mean relief on rates, though, Sand warned. “For shippers, more capacity is always welcome and will help them to get supply chains moving more reliably, but they should not expect this to translate into falling freight rates,” he said.

According to Xeneta data, spot rates have more than doubled on some routes since before the U.S.-Israel war on Iran began on February 28. Rates increased 214% on the Far East to U.S. West Coast spot market; Far East to U.S. East Coast rose 176%. Even routes going nowhere near the troubled region of the Persian Gulf have been affected, with North Europe to U.S. East Coast spot rates increasing 59% to June 25.

According to Sand, offered capacity on Far East to U.S. West Coast is up 10.5% from a week ago, U.S. East Coast is up 12.1% and North Europe is up 11.9%. These are substantial weekly increases and the largest seen since the Strait of Hormuz closure at the end of February, he noted. 

“This is not an act of kindness by carriers,” Sand said. They are compelled to make their move on the back of rocketing spot rates. “The capacity injection is not only a response to very high freight rates. Carriers are positioning themselves for the official peak season, which begins on July 1, and deploying capacity now to be ready for when seasonal demand really takes off. That is a practical decision, but shippers will want to know why capacity has been essentially flat for months while they have been enduring so much operational and financial pain.”

“The only good news for shippers is that the situation is not as bad as it would otherwise have been, with spot rates expected to climb further heading into July but with slower growth compared to recent weeks.”