Shipping lines are holding onto capacity despite ongoing price war
🚢 Shipping lines are holding onto capacity despite ongoing price war.
This action is likely due to capacity cuts having significant long-term consequences for their business. When shipping lines cut capacity, it means they are reducing the number of ships they have in operation or reducing the amount of cargo they can carry. While this may temporarily reduce supply and increase freight rates, it can also have negative consequences. Firstly, cutting capacity can lead to the loss of economies of scale. Shipping lines invest significant capital in their vessels, and reducing the number of ships in operation can lead to decreased efficiency and higher costs. Secondly, cutting capacity can also result in the loss of market share. If a shipping line reduces capacity, its competitors may be able to capture a larger share of the market, which can be difficult to regain once the market recovers.
Shipping a 40-foot container from Shanghai to New York now costs nearly $10,000, causing frustration among importers and talk of a market bubble.