As the year winds down, carriers and shippers engage in an annual dance commonly known as the holiday peak season; but in 2017, carriers just haven’t been able to set the pace.
After several years of consolidation and vessel sharing planning, carriers believe they finally landed on the framework that would bring the containerized freight market back to health. Unfortunately, the numbers were just too close for this peak season as capacity overhang offset spot rates.
While U.S. imports have been strong, extra capacity has eroded carrier-attempted general rate increases (GRI). Extra capacity from 2016 coupled with a new injection of ten extra-loader vessels has kept spot rates steady heading into Golden Week, a national Chinese holiday when manufacturing closes, marking the final push as shippers try to get product on the shelves. Chinese manufacturing is also under scrutiny as the country’s Ministry of Environmental Protection (MEP) targeted, evaluated, and shut down thousands of factories and businesses failing to implement pollution controls.
Deliveries of new, completed mega-vessels with carrying capacities of 22,000 TEU will determine if shipping lines will be able to effectively cycle out excess volume in the coming year. Fuel economies and port serviceability, for issues such as dredging maintenance and labor, are also closely tied to the model’s success. For now, carriers are content to ride out the remainder of 2017 as long as rates remain profitable.
