The major ocean carriers are taking a cautious approach to capacity additions in the hope that a better supply/demand balance will lead to higher freight rates to offset ongoing losses. This means there may be both supply additions and capacity reductions, depending on the trade lane, with the latter being achieved by
- implementing void/blank sailings
- scrapping out-of-date ships (450,000 TEUs could be sent to the scrap yard in 2019 and an additional 500,000 could be taken out of service in 2020)
The ongoing U.S.-China trade war helped boost demand in late 2018, but the immediate future looks less promising for three reasons:
- Fears tariffs could go up significantly
- Infrastructure bottlenecks
- Front loading ahead of the implementation of low-sulfur fuel regulations next January
For more information, contact Debbie McGuire, Manager – Freight Solutions.