A 42.67% drop? Shipping companies: No worries~ Take my three strategic moves!
On January 3rd this year, the SCFI was still firmly sitting at a high of 2505.17 points. However, by last Friday (March 7th), it had plummeted to just 1436.30 points, a staggering drop of 42.67%, which is quite lamentable.
Faced with freight rates that have become as cheap as "cabbage prices," shipping giants certainly cannot stand idly by. They have rolled out significant measures—canceling voyages, transferring capacity, delaying the launch of new routes, and cutting back on shipping capacity.
According to Drewry's forecast, out of the 715 scheduled sailings on the main Europe-America routes over the next five weeks, 47 will be canceled, which equates to a 6.57% reduction in sailings.
Mediterranean Shipping Company (MSC) has confirmed its withdrawal from the Mustang service across the Pacific and is redeploying its largest 24,000 TEU container ships from the Asia-North Europe route to the Mediterranean and West Africa routes.
The Ocean Alliance has postponed the launch of a new Asia-North Europe route originally set for March, while the Premier Alliance is also expected to delay the start of two Pacific routes that were planned to commence in May.
From a data perspective, global container shipping capacity has increased by more than one-third from the end of 2020 to the end of 2024, while the growth in global cargo volume has been less than 10%.
Industry leaders have pointed out that with the launch of new ships, the issue of overcapacity is gradually expanding. Whether it's port congestion or the Red Sea crisis, only a portion of this capacity can be absorbed.
The total shipping capacity in March of this year was 1.686 million TEUs, a decrease of 81,000 TEUs compared to the previous month.
Despite this, the current shipping capacity is still 16% higher than the same period last year, which is considered a potential precursor to further significant capacity reductions in the future.
Data from MDS Transmodal shows that compared to February, shipping companies have made more substantial cuts in capacity on the Pacific routes in March, with a reduction of 5% this month.
Whether shipping companies will continue to reduce capacity in the next steps remains to be observed.