Global ocean carriers are weathering staggering increases in vessel capacity
Container lines have historically been able to withstand increases in vessel capacity, but a massive increase in capacity could potentially pose challenges for the industry. Container lines have typically responded to increases in vessel capacity by adjusting their supply-demand balance through strategies such as idling vessels or reducing sailings to prevent oversupply and maintain freight rates. However, a massive increase in capacity could result in a prolonged oversupply situation, leading to downward pressure on freight rates and profitability.
In addition, a significant increase in vessel capacity could also put pressure on ports and other parts of the supply chain, as they may not be able to handle the increased volume of cargo. This could lead to congestion, delays, and increased costs for container lines. Furthermore, a large increase in vessel capacity could also lead to consolidation in the industry, as smaller or less efficient container lines may struggle to compete with larger players with greater economies of scale.
Flexport has launched The Convoy Platform, a technology solution aimed at providing small carriers with access to freight while offering real-time competitive rates, shipment visibility, and on-time performance to shippers and brokers.