CAPACITY constraints caused by the rerouting of vessels around the Cape of Good Hope to avoid attacks in the Red Sea are likely to last up to Chinese New Year, but longer term are unlikely to cause a shortage of space for shippers.

Analysis of carrier schedules by Sea-Intelligence indicates that an impact is “clearly visible” in terms of capacity, due to a combination of services being held back in departure while awaiting rerouting, and some services arriving late back to Asia, with a drop of over 20% year on year in mid-January.

“What the data does show, is that shippers could expect a capacity crunch for Asian exports in the coming weeks, and this is what is driving the current rate spike,” said Sea-Intelligence chief executive Alan Murphy. “But this crunch is also seen to be temporary given the current information.”

He said that if carriers were not able to meet the extra capacity demands, there would be a shortfall in weeks two and three, as there would be no vessel departing Asia in a week where there would have been one had normal scheduling been in place via the Suez Canal.

But there remained uncertainty over what impact this might have.

“There is no way to distinguish between blank sailings as a domino effect of re-routing vessels, and blank sailings during the normal course of operations,” Murphy said.

“This is especially true of the period between Golden Week [in October] and Chinese New Year, as the market is often soft and carriers blank significant capacity to bring it in line with the diminished demand; more so in 2023 because of the supply/demand dynamics post-pandemic.”

Analysts at Drewry also suggest that the impact will be short lived. Drewry estimates that up to 820 ships, comprising 10m teu of capacity of a global total of 28m teu, are potentially affected by the impact of Red Sea attacks and diversions.

“As these delays happen just before the Chinese New Year rush there is currently very limited capacity available from Asia to Europe,” said Philip Damas, head of Drewry Supply Chain Advisors.

He pointed out that while delays to cargoes from Asia to the US east coast via Suez would be around six days, for voyages to northern Europe the 10 day delay represented 30% of the total voyage time, while to Mediterranean ports, an additional 15 days was 57% longer than the previous voyage.

“This will create supply chain difficulties for Mediterranean importers and exporters,” he said.

But beyond the mid-January shortfall, however, capacity is likely to easily meet demand following Chinese New Year even with diversions.

In 2023, following Chinese New Year, carriers blanked an additional 24%-29% over what had been previously announced within just four weeks.

“With Chinese New Year 2024 now just five weeks away, we would under normal circumstances most likely see a similar scenario, as the current capacity deployment appears excessive in terms of the freight rates, even with the temporary rate surge seen following the Red Sea incident,” Murphy said.

Drewry’s Damas was also positive on the medium-term outlook for capacity.

“The next five weeks leading up to Chinese New Year on February 10 will be difficult for shippers and shipping,” he said.

“But we believe there is more than enough capacity to do the diversions around Africa and that spot rates will decline again after Chinese New Year.”