Container shipping lines chase transatlantic revenues
While transatlantic revenues for the container shipping lines have fallen from their historic highs of last Spring, they remain far above comparable revenue on trade routes from Asia and the temptation to add more capacity is nearly always irresistible.
2023 has seen a slight softening in ocean freight rates from North Europe to the US, with both spot and long-term contracted prices falling since the start of the year.
The transatlantic trade has withstood unparalleled market and macroeconomic forces, with only minimal rate declines, compared to the dramatic falls seen from Asia and other key ocean trade lanes since last summer.
The negative forces impacting global consumer demand, the consequential fall in international freight volumes and the easing of congestion at ports, releasing previously constricted capacity, is pushing rates down across the board, as carriers fight for business.
The transatlantic is a very commercially attractive route right now for the container shipping lines, when you take freight rates and average transit times into account.
It offers far greater revenue and profitability than competing corridors, so with the increase in blanked sailings from the Far East and the general easing of congestion, carriers have moved available capacity to this trade to take advantage. The active container fleet on the Transatlantic increased by an impressive 16.2% in 2022, equivalent to 162,300 additional teu slots
Despite the increase in capacity, the North Europe to US routes continued to deliver exceptional profitability for carriers through to the end of last year. At a time when rates were nosediving elsewhere.
In Q4, the average transit time to the US was just over 20 days, delivering an average revenue per FEU per day that was more than double what could be achieved from the Far East to the US West Coast.
Despite downward pressure on rates, they are much higher than pre-pandemic levels and it is worth noting how historically strong prices are at present.
Rates are largely stable and available capacity has been steady so far in 2023, while Container Trades Statistics (CTS) data shows volumes from North Europe to the U.S. were down last year just under 2%, and volumes from the East Mediterranean down 7.5%.
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