who are securing a vessel for themselves and on the surface, it could sound as good news for anyone wanting to move freight, but in reality it also serves to create more problems as outlined under the next two elements. Element 3: All vessels which can move containers are already in use. This means that starting a new service, even with just a single vessel, on for example Asia to Europe, requires that a vessel is removed from another trade. Hence more capacity is created in one trade while a shortage problem is created elsewhere. The vessels will quite simply go where there is the will to pay the highest charter rate. Element 4: The insertion of more capacity into a particular trade lane only increases the shipping capacity. It does not increase the port capacity, nor does it increase the capacity related to trucks, chassis, rail, warehouses etc. which is necessary at the destination to take the cargo out of the port. This creates port congestion. Presently, 54 vessels are waiting in line outside Los Angeles. This is up from 40 vessels a month ago – and essentially a doubling compared to the situation in the early part of 2021 when a queue of 25 vessel was seen as a major problem. There are many more moving elements, but these are some of the most important ones. This explains why a shipper with cargo from for example East Africa to Asia can see a shortage problem and increasing rates – the vessels normally used in this trade might to some degree have been diverted into the Pacific trade. It has been loaded with cargo, but is now stuck outside California unable to move any cargo anywhere. This is also the reason for the continuing upward pressure on spot rates in many trades. As long as demand exceeds supply, this will drive rates upwards and vessels will be re-deployed to the trade lanes where they can fetch the best rates. The latest development has been public announcements by CMA CGM and Hapag-Lloyd that they are no longer increasing the spot rates. Several aspects need to be kept in mind in this context. It can potentially be a sign that rates have peaked and hence the carriers in question do not believe they will have the ability to increase them further anyway. Finally, it should be noted that even if a carrier does not increase the spot rate, this does presumably not prevent an increase of some types of surcharges such as for example port congestion charges, equipment availability charges, bunker fuel surcharges etc. All in all, market conditions currently remain under pressure seen from the perspective of cargo owners and it will take a long time to unravel the bottlenecks in the system. A full reversal to normality is unlikely to take anything less than six months, and it will not take much to push that timeframe even further into the future.
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