Container Rate Collapse Deepens as New Capacity Enters the Market

According to Xeneta’s Shipping Index (XSI), global long-term shipping rates sank to a two-year low in July, falling 9.5% since June, plummetting 57.8% since the same period in 2022. And just as rates hit a fresh low, the bad news for carriers could continue for some time as June saw the highest ever monthly deliveries of new ships, with more than 300,000 TEU of capacity from a total of 40 new ships added to the market. In the first six months of the year, a total of 990,000 TEU was delivered, with around the same to come in the second half of 2023.

"Carriers waiting for higher volumes in July, and in the coming months due to peak season, look increasingly likely to be disappointed," said Xeneta market analyst Emily Stausbøll. "Even if volumes do increase, and whatever happens to demand, overcapacity is now inevitable as these record numbers of new ships being delivered this year will have a wide-reaching effect."

Low demand is still the underlying factor affecting rates and the figures for July were gloomy across the board. The XSI for Far East exports fell by just 2.7% to 188.62 in July, but this is now the lowest this index has been since April 2021, and a 69.5% drop from July last year.
European imports were down by 12% from the previous month and this sub-index is now down by 52.7% since the start of this year. A slight fall of 2.9% in the XSI for US imports has brought the index to 231.6 points in July. "This is the only index still above 200, or still more than twice as expensive as the average rate in January 2017," said Stausbøll.

Just as the threat of strikes at US West Coast ports was averted after a deal was signed, a new twist in port labor relations has jumped to the fore. The Canadian chapter of the ILWU went on strike in July, disrupting imports through the ports of Prince Rupert and Vancouver and a considerable slice of the US market.

"Low import volumes and space at some ports allowed shippers and carriers to mitigate delays and find alternatives when the Canadian ports were temporarily closed, but this situation is yet another thorn in the side for the industry at a crucial time leading up to peak season," said Stausbøll.