Shipping capacity set to rise this year despite Red Sea disruption – Clarkson

Shipping services company Clarkson has said that a post-pandemic investment in container ships should lead to capacity jumping this year and pushing down prices, but could be blown off course by problems in the Red Sea and the Panama Canal.

The business said that capacity is expected to increase 7.3% this year, while demand will only rise 3% as the global economic situation improves.

Some of this increase in capacity is because container shipping liners invested in their fleets after getting a big injection of cash when shipping costs soared in 2021 as global economies reopened following the Covid-19 pandemic.

It leaves a potential impact from the increased supply of containers being shipped globally, the business said.

“However, the duration of disruption in the Red Sea remains highly uncertain and the scenario of a prolonged period of re-routing container ships around the Cape of Good Hope would have significant demand implications, providing the possibility of significant upside to themarket outlook,” Clarkson said on Monday.

Disruption in the Red Sea started late last year as Houthis in Yemen, one of the parties in the country’s nearly decade-long civil war, started attacking ships travelling through the area.

Vessels travelling from the Mediterranean to the Indian Ocean through the Suez Canal are forced to transit through the Red Sea. Most shipping through the canal has therefore stopped as a result of the attacks, with many ships instead routing around Africa.

Container shipping services is only one part of Clarkson’s business. But as shipping costs spike, so do the fees that the company can charge.