Panama Canal Limits Ineffectual in Halting Rate Slide as Shipping Lines Increase Capacity

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Written By Jennifer Joslyn

💧 Panama Canal Limits Ineffectual in Halting Rate Slide as Shipping Lines Increase Capacity.

Despite Panama Canal transit restrictions and efforts to curb capacity, carriers have been adding approximately 20% of incremental capacity on the Asia-US East Coast route since the end of August. The average capacity deployed over the past five weeks reached 246,000 TEUs, compared to 204,000 TEUs in the previous five weeks. However, capacity utilization has dropped to 85%, and freight rates have fallen by $1,000. These developments indicate significant challenges for the shipping industry, particularly in the transpacific market, where rates are eroding rapidly, and carriers are reluctant to cut capacity. The Panama Canal's load limits, implemented due to lower water depths, continue to affect cargo volumes, exacerbating supply overcapacity issues.

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Jennifer Joslyn
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