Capacity cuts taking effect? Multiple container shipping routes now fully booked!

Recently, market rumors have circulated about space shortages on multiple container shipping routes, including the US, Middle East, and Southeast Asia lanes.

According to several freight forwarding companies, this is indeed the case, and these routes are already showing signs of a rate rebound. A listed shipper stated that there is no space available on the US route through the end of the month.

Multiple freight forwarders indicated that while space is tight on several routes, this is largely due to shipping lines reducing vessel capacity. "Liners are hoping to push up next year's (long-term contract) rates, so they are cutting capacity to lift spot rates toward year-end."

One freight forwarder further explained that since the current space crunch is artificially created, it does not reflect a genuine surge in cargo volume. When asked about the severity, the forwarder disclosed: "It's only slightly tighter than normal, not a massive squeeze."

For the US route, in addition to carriers reducing vessels and space, freight forwarders noted the concentration of shipper demand for Black Friday and Christmas. "In previous years, shipments for Black Friday and Christmas on the US route mostly occurred during the July-September peak season. This year, however, some shippers may have been waiting to gauge consumer spending for these holidays, and the availability of express services (shorter transit times) from Shanghai to the US has also caused some delays."

Looking at freight rate indices, multiple route rates rose from October 14 to 20. According to the Ningbo Shipping Exchange, the Ningbo Containerized Freight Index (NCFI), part of the Maritime Silk Road Index, closed at 653.4 points this week, up 5.0% from the previous week. Rate indices increased on 16 of the 21 routes tracked.

On the North American routes, transport demand has shown some recovery, with widespread temporary blank sailings by liner companies, leading to a slight increase in spot market booking rates. The NCFI US East Coast route freight index stood at 758.1 points, up 3.8% from the previous week; the US West Coast route freight index reached 1006.9 points, up 2.6% from the previous week.

In addition, on the Middle East route, liner companies have strictly controlled capacity, resulting in tight space and a continued sharp rise in spot market booking rates. The NCFI Middle East route index was 813.9 points, up 22.3% from the previous week. The Red Sea route, driven by a notable recovery in shipment volumes at the end of the month, reported 1077.1 points, up 25.5% from the previous week.