Shipping lines can’t resist transatlantic revenues

While transatlantic sea freight rates have fallen far from their historic highs of last April, the comparatively high revenue opportunities continues to attract more ships to the trade, which are being shifted in from less profitable markets like the Asian westbound and trans-Pacific, potentially undermining the high rates that attracted the vessels in the first place.

2023 has seen a slight softening in ocean freight rates from North Europe to the US, with both spot and long-term contracted prices falling since the start of the year.

The transatlantic trade has withstood unparalleled market and macroeconomic forces, with only minimal rate declines, compared to the dramatic falls seen from Asia and other key ocean trade lanes since last summer.

It offers far greater revenue and profitability than competing corridors, so with the increase in blanked sailings from the Far East and the general easing of congestion, carriers have moved available capacity to this trade to take advantage. The active container fleet on the Transatlantic increased by an impressive 16.2% in 2022, equivalent to 162,300 additional teu slots

Last month Alphaliner reported numerous service additions: Cosco, OOCL and ONE doubled the sailing frequency of their East Med-East Coast “EMA” service. THE Alliance and Ocean Alliance reinstated calls in New York and Savannah, Georgia, for their joint Med-East Coast “AL6” loop. Ellerman City Liners launched a new North Europe-East Coast service. Evergreen upsized its ships in the trans-Atlantic market. The 2M alliance between Maersk and MSC added three ships to its coverage. Combined moves which, analysts believe, pushed rates Downey over 10% in a week.

Despite the increase in capacity, the North Europe to US routes continued to deliver exceptional profitability for carriers through to the end of last year. At a time when rates were nosediving elsewhere.

In Q4, the average transit time to the US was just over 20 days, delivering an average revenue per FEU per day that was more than double what could be achieved from the Far East to the US West Coast.

Despite downward pressure on rates, they are much higher than pre-pandemic levels and it is worth noting how historically strong prices are at present.

Rates are largely stable and available capacity has been steady so far in 2023, while Container Trades Statistics (CTS) data shows volumes from North Europe to the U.S. were down last year just under 2%, and volumes from the East Mediterranean down 7.5%.

We are US experts, with daily import/export air freight services, full load container departure on next vessel and weekly groupage services.

We provide National Custom Broker coverage, with same day clearance and delivery.

EMAIL Matt Fullard for information, advice and guidance.