Managing an Oversupplied Sea Freight Market

Unpredictable scheduling, blank sailings and overcapacity continue to unsettle the major east–west, transatlantic and transpacific trade lanes. But with tools such as late-stage blanking, slow steaming and selective vessel deployment, carriers are actively managing capacity to protect pricing and profitability.

Since the pandemic, capacity volatility has soared on key east-west trades. On the Asia–North Europe route, for example, weekly vessel capacity now fluctuates by nearly 30%, which is more than double the average variation seen between 2011 and 2019. Similar patterns are visible on Asia–Mediterranean and transpacific lanes, albeit to a lesser extent.

This volatility, which is driven by inconsistent vessel sizes, blank sailings, and disrupted schedules, has created the erratic cargo flows that intensified congestion at major ports this year. Rather than a predictable weekly rhythm, terminals are now dealing with surges followed by lulls, complicating yard planning, berth availability, and inland logistics.

The Next Stress Tests

China’s Golden Week holiday each October is typically preceded by a demand spike followed by a sharp dip, with carriers aligning supply with reduced demand. However, despite weaker demand signals, scheduled vessel capacity on Asia–Europe and Asia–North America trades remains significantly above previous years.

On the Asia–North Europe lane, capacity is set to be 8% higher than last year and over 25% above pre-pandemic levels. Blanked sailings currently account for just 3.8% of planned volume—far below the 15.4% removed in 2024.

Unless carriers remove up to 21 additional sailings in the coming weeks, the market risks excess capacity during a period traditionally associated with reduced demand. Analysts widely expect last-minute blankings to be announced, following a recent pattern of reactive, rather than pre-emptive, adjustments.

The transatlantic trade lane illustrates the complexities of carrier strategy in an oversupplied market with muted demand. Despite westbound spot rates below breakeven, blank sailings remain minimal. This may reflect a longer-term view, with carriers preferring to hold share and absorb short-term losses while waiting for demand to stabilise under the new US–EU tariff regime.

Carriers, meanwhile, continue to adjust alliances and service patterns. This last-minute approach, while unsettling for shippers, reflects carriers’ preference for short-notice flexibility over long-term commitment. For shippers, the unpredictability increases the risk of missed connections and inland bottlenecks, especially when relying on a single carrier or alliance.

The Carriers’ Strategic Levers

In the absence of demand control, carriers are increasingly leaning on their main pricing lever: supply. While blank sailings provide some short-term relief, they are often insufficient in isolation, especially when record levels of new tonnage are still entering the market.

Parking full strings of vessels, particularly the new ultra-large container ships, is an effective solution with significant rate upside. Even sidelining one loop per consortium on Asia–Europe could raise average rates by hundreds of dollars per TEU. But this strategy comes with high opportunity costs and political challenges inside boardrooms.

Carriers are therefore exploring alternative methods:

• Slow steaming: By reducing sailing speeds across multiple trade lanes, more ships are absorbed into the same network, effectively tightening capacity while improving fuel efficiency.
• Two-tier pricing: On Asia–Europe, some carriers are reportedly floating premium rates for Red Sea transits and discounting longer Cape routes, subtly incentivising shippers to favour stability over speed.
• Schedule management: Transatlantic services show how carriers use blank sailings not only to suppress overcapacity but also to recalibrate service reliability. Though capacity on North Europe–US East Coast routes rose slightly in September, the volume of withdrawn sailings remains limited—under 2%—even as rates continue to hover below breakeven.

Sea freight capacity is no longer a static variable. It is a dynamic lever that carriers actively manage in real time to defend profitability in an oversupplied and volatile market. Golden Week blankings and the transatlantic trade’s soft discipline on capacity illustrate two contrasting approaches: one reactive and seasonal, the other strategic and cautious.

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