The vessel utilisation rate on the westbound transatlantic route is continuing to drop. In its latest report, Sea Intelligence highlights how the trade war between the US and China is clearly having a significant impact on this trade lane.
The outlook for the future is one of a serious slump in traffic flows. Sea Int. has come to this conclusion following an analysis comparing the capacity planned by shipping companies for the next 12 weeks with two different demand scenarios.
The first is a scenario of 0% growth in demand, while the second is an optimistic scenario of 5% growth. “In both cases, vessel utilization is projected to “crash” to historically low levels, dropping well below the 2018-2019 pre-pandemic normal.” says the consultancy firm’s CEO, Alan Murphy.
Assuming an 80% correlation between vessel utilisation and spot rates, the forecast shows a decline in rates into negative territory. “While rates will obviously not turn negative, the model’s trajectory indicates the market is poised to become so dire that shipping lines will be forced to withdraw significant capacity, to establish a better balance,” explains Alan Murphy, who concludes: “Cargo owners on the trade should therefore prepare for the strong likelihood that many planned vessel departures in the coming months will be cancelled.”
Translation by Giles Foster
