News / Asia-Middle East capacity plummets despite Cosco vessels exiting Hormuz

Photo: VesselFinder

Since the start of the US-Israel-Iran war, Far East-Middle East container shipping capacity has seen the sharpest drop, with shipping lines pulling a quarter of their vessels from this route.

Linerlytica’s report this week stated that before hostilities broke out on 28 February, the Far East-Middle East trade had around 1.34m teu of shipping capacity. This has fallen to about 1.07m teu today.

Linerlytica said further network adjustments are still to come.

“The displaced capacity has not created any surplus supply thus far, as the ships have been primarily re-assigned to the Far East-Indian subcontinent and Far East-Mediterranean routes with additional India-Oman, Northern UAE and Red Sea connections needed to keep cargo flows to the Gulf states, that has also added to the heavy congestion that has built up at Salalah, Khor Fakkan and Mundra,” the consultancy said.

“However, further capacity displacement would add pressure to other markets to absorb the surplus ships, with container cargo demand already reeling from the effects of higher oil prices,” it added.

Meanwhile, the two COSCO megamax container ships that were denied departure from the Strait of Hormuz last Friday were yesterday given the green light from Iranina authorities to depart the region.

Vessel-tracking data shows the 2015-built 19,000 teu pair, CSCL Arctic Ocean and CSCL Indian Ocean, began sailing out of the Hormuz strait around 8am GMT yesterday. Currently, both ships, which deployed on Far East-Middle East services, are in the Arabian Sea and have indicated Malaysia’s Port Klang as their destination.

Sources told The Loadstar that initial clearance was withheld amid talk that Tehran sought $2m from ship owners to guarantee safe passage.

The Iran Revolutionary Guard Corps has implemented a toll booth, asking ships from non-hostile nations to file supporting documents and accept its escorts.

Reportedly, some ships have paid the toll in Chinese yuan.

CSCL Arctic Ocean and CSCL Indian Ocean, originally part of China Shipping Container Lines’ fleet, were absorbed into COSCO’s fleet after the two state-owned companies merged in 2016.

Linerlytica said the ships are the first non-Iran-linked container vessels to leave the Persian Gulf since the AD Ports-owned 2,553 teu SSF Leo did so on 3 March.