Report shows that ocean freight rates are linked to overall capacity

May 9, 2011

A report from ComPair Data shows rates and available capacity are inextricably linked when it comes to container shipping. The quarterly report, the Rate-Capacity Nexus, shows how capacity and rates on key North American trades fluctuated throughout 2010, giving a complete picture of how these two crucial variables are influenced by one another.

The report shows that carriers enjoyed bumper rates on the main routes to North America in the first half of 2010 thanks to the strategy of pulling capacity and shelving ships in late 2009 and early 2010.

Rate-Capacity Nexus also demonstrates how quickly those rates receded in the fourth quarter when capacity wasn't pulled in late 2010.

ComPair Data examines the relationship between freight rates and capacity on trades to and from North America in a new quarterly report, Rate-Capacity Nexus. The report shows how allocated capacity - that is, the space ComPair Data estimates carriers allocate to specific trade lanes - moves quarterly in relation to freight rates.

The rate and capacity data illuminates how the liner industry deviated from the strategy that worked so well in late 2009 and early 2010 - that is, pulling capacity on key lanes during the slack season and using slow steaming to absorb capacity arriving in the form of new vessel deliveries.

While slow steaming has remained as a fixed component of carrier strategy, lines didn't withdraw services or idle excess vessels to a large enough extent to maintain rate stability.