Significant Capacity Increase for Latin American-Related Services

Significant Capacity Increase for Latin American-Related Services

The global container fleet experienced a 10.6% growth from June 1, 2023, to June 1, 2024, adding 2.85 million TEU slots. This surge in capacity has allowed carriers to deploy more ships on routes between Asia or the Indian Subcontinent and Europe, particularly necessary due to re-routings via the Cape of Good Hope amid the Red Sea crisis.

Consequently, while capacity increases on other trade routes were below 10.6%, the Latin American region saw a notable exception. Alphaliner data reveals that the capacity of vessels in deep sea and regional liner services to and from Latin America increased from 3.5 million TEU on June 1, 2023, to 4.1 million TEU, marking a 17.4% rise.

The weekly chart illustrates the significant impact of the Red Sea crisis on the overall container fleet deployment. Carriers operating Asia-Europe weekly services had to add 25-30% more ships to maintain full staffing. As a result, the container fleet on this route is now nearly 24% larger than a year ago, with 23.8% of the total container fleet active on this East-West route as of June 1, 2024, up from 21.2% a year prior.

Although some Indian Subcontinent-Europe loops were closed due to a ship shortage, the container fleet for services to and from the Middle East and India/Pakistan saw a 22% year-on-year increase. On the Transpacific route, the year-on-year capacity increase was limited to just 3.7%. Compared to June 2022, when the Transpacific market was robust, capacity has decreased by 9.1%.

This trend is expected to change this summer as spot freight rates from Shanghai to California approach the high levels seen in early 2022 during the COVID-19 pandemic. Many carriers, including Wan Hai Lines, COSCO SHIPPING Lines & OOCL, SeaLead, MSC, and ZIM, have announced new Asia-West Coast of North America loops starting in June or July, necessitating at least 35 additional ships with capacities ranging from 3,000 to 16,600 TEU.

The Transatlantic is the only East-West trade where capacity has decreased year-on-year. With 1.13 million TEU of capacity between North Europe and the East Coast of North America, down 2.8%, this route now accounts for just 3.8% of the container fleet, down from 4.3% last year.

While the fleet growth between Asia, the Indian Subcontinent, and Europe was expected due to the Red Sea crisis, the strong growth in fleet deployment for Latin American services might come as a surprise. Carriers such as CMA CGM, Hapag-Lloyd, and COSCO SHIPPING Lines have recently received new neo-panamax ships with capacities of 13,250 to 14,100 TEU, designed specifically for Latin American trade with high reefer capacities and named after South American regions or cities.

This development has increased the fleet for Latin American-related services to 4.1 million TEU, 1 million TEU more than two years ago. A more detailed analysis shows that the fleet trading between Asia and the West Coast of South America now stands at 1.53 million TEU, with fifty vessels in the 12,500 to 17,999 TEU size range, accounting for 47% of all capacity on this route.

Another sixteen ships over 12,500 TEU are deployed in services between Asia and the East Coast of South America, where the total fleet capacity is 860,000 TEU. The average ship size is smaller in the trade between Europe and South America. The active fleet between Europe and the East Coast represents 392,500 TEU, with 38% of these slots on ships over 10,000 TEU. The trade to the West Coast accounts for 289,000 TEU of fleet capacity, with ships over 10,000 TEU representing 36% of this total.