According to Drewry’s recent report on intra-Asian shipping, the total effective capacity deployed by carriers across various intra-Asian trades has surged by 8% between April and May. This increase amounts to an additional 646 thousand twenty-foot equivalent units (kteu), potentially threatening the stability that typically characterizes these trades. The increase was particularly notable on the top five intra-Asia routes, where capacity grew by 9% during the same period. Among these routes, Southeast Asia-Greater China and North Asia-Greater China experienced double-digit growth, while other routes showed more moderate increases.
Despite this significant rise in capacity, traffic volumes on these top routes only saw a 4% increase. The Greater China-to-North Asia trade route faced the biggest challenge, having to absorb the largest jump in effective capacity. In May, carriers added 41 kteu, a 7.3% increase from April, raising the total effective capacity to 595 kteu. In contrast, backhaul capacity grew even more sharply, with an additional 83 kteu, marking a 9.6% increase.
As a result, the utilization levels for headhaul shipments from Greater China to North Asia dipped from a healthy 84% in April to a concerning 74% in May. This decline has led to a softening of spot rates, prompting carriers, forwarders, and shippers to brace for further decreases in freight rates in the coming weeks. Meanwhile, the Southeast Asia-to-Greater China trade saw a more significant monthly capacity increase of 226 kteu, which represents a 15.4% growth. If this trend continues, it could trigger a broader decline in freight rates across additional trade routes.
Drewry’s intra-Asia Container Index has already fallen by 27% this year, reaching US$707 per 40-foot container as of mid-June.