With the market on a decline in terms of supply/demand, shift in sailing distance impact becomes an added element.
During the pandemic market disruptions in the period mid-2020 to January 2022, the distance impact on container shipping was the need for a 2.1 percent additional capacity on top of any capacity injection needed to cater for trade growth in itself. “However, the developments into 2022 have shifted to become negative, and in May 2022 we now see a distance impact where there is now a reduced need for vessel capacity of 3.4 percent as a consequence of shortening distances (Figure 1),” says an update from Sea-Intelligence.
Sea-Intelligence looked at the development of the average distance a laden TEU moves as well as its impact on global vessel capacity. The data has been sourced from Container Trade Statistics (CTS), ” overlapped with our own calculations on sailing distances and TEU*Miles.
![](https://news.slpa.lk/wp-content/uploads/2022/07/table-sea-intel-s.jpg)
“As a starting point, we looked at the sailing distances on the head-haul and saw a sharp drop during the initial phase of the pandemic followed by a swift rebound in the second half of 2020. That elevated level was maintained all the way to early 2022, and thereafter there was a notable decline. Assuming constant sailing speeds, an increase in sailing distances would also result in a commensurate increase in the need for vessel capacity.”
At the start of the pandemic, the need for vessel capacity dropped by more than 6 percent, which was met with blank sailings by the carriers, the update said.
“As the market rebounded, the sailing distance effect resulted in the need for 1 percent additional vessel capacity on top of any impact the volume growth in itself contributed,” says Alan Murphy, CEO, Sea-Intelligence. “This effect was quite stable from mid-2020 until January 2022. However, from February 2022, the effect has shifted and has become negative. The latest data from May 2022 shows a negative effect of -1 percent.”
As the current market is clearly on a downwards trajectory in terms of supply/demand balance, the shift in sailing distance impact once more becomes an added element, pushing the development – this time downwards, says the update.