Cape of Good Hope detours look set to continue until 'August, at least'
The impending network changes made by the big container lines look set to ensure continuation ...
© Yali Shi
By Alison Koo
Yang Ming management expects oversupply concerns to ease this year as detours round the Cape of Good Hope continue.
The gap between container shipping supply and demand was 8% in 2024, and is expected to narrow to 4% in 2025, added the carrier.
CCO Kevin Lee added that, with freight rates being higher year on year and with high port handling costs, Yang Ming was optimistic about negotiating higher contract shipping rates this year.
He said: “The supply of shipping capacity is still greater than the demand. However, due to factors such as the geopolitical Red Sea crisis and the route detour strategy maintained, coupled with the risk of strikes in the eastern United States and continued supply chain disruptions, the direction for freight rates is difficult to predict.
“In Q4 24, they increased compared with the fourth quarter in previous years. We will be cautiously optimistic and closely observe this year.”
He continued: “Due to the higher freight rates in 2024, the contract rates in 2025 are estimated to be higher, but the official decision will not be made until March or April.”
Yang Ming’s chief strategy officer, Ed Wu, said transpacific demand since December had been better than expected.
“We cannot be sure if it’s due to US president-elect Donald Trump’s planned tariffs, the early Chinese New Year (which falls on 29 January) or the risk of strikes in US east coast ports. We’re still monitoring the rush to ship goods to the US.”
As for whether Mr Trump’s proposed tariffs will lead to growing triangulated trade between China, Mexico and the US, Mr Wu pointed out that Mexico’s cargo volume had been growing for a while.
He explained: “Due to the US-China trade war for many years, manufacturers have moved to South-east Asia, resulting in the phenomenon of shifting cargo volumes. Triangular trade depends on the US. New policies regarding tariffs on imports from Mexico and other re-export destinations may cause East Asian exports to shift.”
Following Yang Ming’s recent announcement on acquiring 13 post-panamax box ships, consultancy Linerlytica believes the company’s reluctance to order ships larger than 20,000 teu suggests the Taiwanese operator will focus on the transpacific trade. Taiwanese media reports, citing Yang Ming sources, have suggested the company is also open to acquiring second-hand vessels.
In a recent report, Linerlytica said: “Yang Ming remains the only top-10 carrier, apart from Zim, that does not operate any ships of this [20,000 teu] size. The move suggests Yang Ming’s future growth will be targeted at the transpacific and Latin American trades, rather than Asia-Europe routes.”
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