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Global News Carriers ramp up trans-Atlantic capacity as rate levels rise

Registration dateNOV 10, 2022

Greg Knowler, Senior Europe EditorAug 25, 2022 11:37AM EDT
source : JOC.com (The Journal of Commerce)

Greg Knowler, Senior Europe Editor
Aug 25, 2022 11:37AM EDT
source : JOC.com (The Journal of Commerce)

Carriers ramp up trans-Atlantic capacity as rate levels rise Congestion continues to plague ports on both sides of the Atlantic, with strong demand absorbing an increase in capacity.
Photo credit: Port of Rotterdam.

Capacity on the trans-Atlantic trade increased 12 percent through the first seven months of the year as 120,500 extra TEU slots were added to Europe-North America loops to take advantage of high rate levels, according to Alphaliner.

Spot rates on trans-Atlantic westbound routes have risen steadily since Jan. 1. The current rate from North Europe to North America valid for 30 days or less is up 24 percent since the beginning of the year at $6,823 per TEU, according to rate benchmarking platform Xeneta.

That is in stark contrast to the two major trade lanes out of Asia. On the Asia-North Europe trade, the Xeneta spot rate stands at $5,264 per TEU, down 37 percent since Jan. 1, while the current Asia-US West Coast spot rate of $5,517 per FEU is down 39 percent.

“The addition of some 120,500 extra TEU slots in Europe-North America loops in 2022 is not surprising as westbound ocean freight rates between Europe and the US East Coast have risen to between $7,000 and $8,500, according to various freight rates indexes,” Alphaliner noted in its weekly newsletter.

“This is four to five times higher compared to pre-pandemic levels and very tempting for the carriers in terms of revenue per nautical mile in view of the relatively short sailing distance,” it added. Port congestion a factor Another contributor to the trans-Atlantic capacity increase is port congestion on both sides of the trade lane, with average round trip times on North Europe-US East Coast and Gulf services at 52 days requiring more tonnage to carry the same amount of cargo.

Schedule reliability on the trans-Atlantic westbound routes improved slightly to 29.8 percent in July, the latest figures available, but that is still down from 42.5 percent in the same month last year, according to Sea-Intelligence Maritime Analysis.

The congestion is not helped by a volume shift from the US West Coast to ports on the East Coast, with Sea-Intelligence data showing import volume on the East Coast grew between 8 percent and 14 percent in the second quarter year over year, while the West Coast growth was 4 percent to 8 percent.

Supporting the elevated rate levels on the westbound trans-Atlantic is strong demand from US importers. While westbound shipments in the first half of just under 1.77 million TEU were down a marginal 0.6 percent compared with the first six months of 2021, US imports in June from North Europe and the Mediterranean rose 13.8 percent sequentially over May to an all-time high of 343,651 TEU, according to PIERS, a sister product of JOC.com within S&P Global. June US imports from Europe were also up 8.9 percent year over year.
· Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter : @greg_knowler.