Excess global demand for shipping capacity evaporates

SEA Intelligence declared excess global demand is almost eliminated, taking into global fleet unavailability due to vessel delays, reports India Shipping News.


"While the nominal fleet grew at a steady rate of roughly four per cent in 2020-2022, there was a substantial decline in the available fleet as delays started to become severe, with a sizable difference between the two," said Sea-Intelligence CEO Alan Murphy.


"The large spikes in demand in February 2021 and 2022 were purely a Chinese New Year effect and did not signal any underlying shifts," said Mr Murphy.


The extreme strength in favour of carriers in 2021 is due to higher cumulative demand growth than the available fleet.


The effect started in July 2020 and began to taper off in the last few months.


Demand was consistently 10 per cent higher than capacity from November 2020 to January 2022.


However, the gap is narrowing and is down to two per cent from pre-pandemic levels, according to the Sea-Intelligence report.


"All in all, what the data shows is that the extreme spikes in freight rates in 2021 were indeed driven by a situation where demand suddenly exceeded capacity at a global level, primarily driven by the unavailability of capacity," said Mr Murphy.


"The recent trend towards normalisation has, in turn, also been primarily driven by gradual improvements in schedule reliability and vessel delays, and as long as improvements continue, we should expect that the supply/demand balance will also continue to decline, and freight rates will be under increasing downward pressure."


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Excess global demand for shipping capacity evaporates
Excess global demand for shipping capacity evaporates