The impact of the Red Sea crisis on containership deployment trends – after a wave of ‘cascading’ rapidly accelerated supply growth last year – is brought home to the market in a new report by shipbreaking firm Clarksons.
Smaller vessels ’cascaded’ from Asia-Europe lanes have been returned back to the tradelane, with the share of Asia-Europe deployment of ships smaller than 17,000 teu rising 11% year on year, to 42%, last month.
Clarksons analyst Thomas Grant also noted that on the transpacific, the share of deployment of 12,000-17,000 teu ships was growing, but the movement of these vessels onto Far East-Europe kept this share steady, at 46% this year.
In comparison, the regression in freight rates in 2023 coincided with multiple newbuilding deliveries, following the heavy ordering during the Covid-induced boom.
As 2.3m teu of ships entered service last year, equating to 8% capacity growth, supply pressure was most acute in the larger sizes – 850,000 teu of 12,000-17,000 teu vessels hit the water, an 18% expansion in capacity in this size range.
As ships of this size are the main transpacific workhorses, many were assigned to this lane, making up 45% of transpacific capacity by December 2023 (up from 39% in January).
The Red Sea crisis reversed the situation, as ships on the Asia-Europe route were rerouted round the Cape of Good Hope to avoid Houthi attacks on the way to the Suez Canal. The longer sailing distance meant more ships were needed to fulfill demand.
Deployment of 12,000-17,000 teu ships has also been increasing on other routes, including Far East–South America, these ships rising from 19% to 37% between January 2023 and December 2023, though this share levelled off at 39% last month.
Grant concluded: “So, Red Sea disruption has impacted deployment trends in 2024… Though impacts have not been as widespread as in the Covid period (with market swings not as extreme), notable changes have been seen for deployment trends in the larger sizes.”