News / 'Surprising' amount of new capacity going to fast-growing Latin America trades

Photo: DP World Callao

Despite the increasingly large amounts of container shipping capacity being tied up in the Asia-Europe trades to mitigate the widespread vessel diversions, other trades have also seen significant capacity injections over the past year, according to new data from Alphaliner.

Chief among them are those serving Latin America, which has seen capacity into the region increase by more than the global growth.

From June 2023 to June 2024, 2.85m teu of new capacity has been delivered to the global shipping fleet, presenting a 10.6% year-on-year increase, and large amounts of this have been added to the Asia-Europe and Asia-Middle East/India trades, which have been most affected by the Houthi attacks on shipping, and have required many additional ships simply to maintain pre-Red Sea crisis capacity.

For example, the Asia-Europe trades have seen a whopping 23.8% increase capacity over the past year, but that hasn’t been reflected in increased volumes, Alphaliner noted.

“The additional ships were needed for the longer voyages and to avoid gaps in the schedule, which would otherwise have reduced the available slots for bookings ex-Asia,” it said.

According to Alphaliner’s capacity calculations, carriers operating Asia-Europe services had a total of 458,834 teu slots available to shippers and forwarders in the first week of June, compared with 455,050 teu in the same week in June 2023 – year-on-year growth of less than 1%.

Container Trade Statistics (CTS) data supports this: it recorded total volumes of just over 1.5m teu transported from Asia to Europe in April (the latest month for which data is available), a year-on-year increase of 4.4%, far below the nominal capacity injection.

However, capacity serving Latin America – whose trades have been largely unaffected by the Red Sea crisis – during the same period, jumped by 17.4% and now totals 4.1m teu across all trades, Alphaliner said.

“While the fleet growth between Asia and the Indian Subcontinent and Europe was to be expected due to the Red Sea crisis, the strong growth of the fleet deployed in liner services to and from Latin America might catch some by surprise.

“Carriers such as CMA CGM, Hapag-Lloyd or Cosco recently took delivery of 13,250-14,100 teu neo-panamax ships, which were specifically built for Latin American trading as they feature high reefer capacities and were named after regions or cities in South America.

“This has pushed the fleet in Latin America-related services to 4.1m teu, which is 1m teu more than two years ago,” the analysts wrote.

The lion’s share of the capacity now deployed to Latin America is ex-Asia, it further noted – with some 1.53m teu deployed on Asia-South America west coast services and 860,000 teu on Asia-South America east coast services.

According to CTS data, April shipments from Asia to Latin America grew 5.2%, to just under 423,000 teu.

In addition, with Cosco resuming construction of the new Peruvian deepwater hub port of Chancay – after a political dispute between the Peruvian government and the Chinese carrier was resolved last month – and scheduled to open its first berth later this year, carriers are limbering up to deploy far bigger ships to Latin America’s west coast.

Around 50 ships serving Asia-Latin America west coast services are in the 12,500-17,999 teu range, representing 47% of all capacity on this route.

Meanwhile, ex-Asia capacity now dwarfs that on offer to Europe, with 392,000 teu capacity on South America east coast-Europe trades and 289,000 teu available on South America west coast-Europe trades.