Participants in the trans-Pacific and other trades could not help notice the speed and magnitude of spot rates increases this spring as carriers took advantage of an unexpectedly tight market resulting from an early peak season slamming into diminished capacity due to the Red Sea diversions.

But were those increases that push TP spot rates to nearly $8,000 per FEU simply just the result of old fashioned forces of supply and demand, or were there new factors at work? Specifically, were carriers empowered to drive up the rates due to there being fewer of them due to consolidation. Given the cliff of overcapacity that carriers may be staring at once volumes ease off later this year, were they further empowered to take full advantage of what could be the last tight market for some time? Many observers believe that while the forces of supply and demand are alive and well, a different carrier emerged from COVID, one more inclined to make unpopular decisions with BCOs and NVOs and less concerned with the consequences in damaged or strained relationships. For example, in January as the impact of the Red Sea attacks the market saw the carriers react swiftly; No testing the market with GRI announcements to see how they perform, rather they collectively raised spot rates by several thousands of dollars per container giving the market no time to adjust. According to one veteran source, carriers “have become a fast-moving market-savvy group of companies.”

Further enhancing carriers’ ability to be in the drivers’ seat in the market is how they have refined and improved their ability via alliances to manage, one might say micromanage, capacity through blank sailings, skipped port calls or super slow steaming. Industry veteran observation of carrier behavior believe the carriers are now more prepared and equipped than they ever have been to counter container shipping downcycles.

For years carriers acknowledged they were their own worst enemy. Overordering of tonnage led to a years-long war of attrition for market share and scarce profits, ending up driving significant industry consolidation. During 2020-2023 the carriers earned $400 billion in profits, unheard of numbers for an industry that struggled off and on for its entire history to earn an adequate return on investment. Having experienced that, carriers understandably would prefer not to return to the bad old days. The fact they are taking actions that ensures that doesn’t happen should have the entire ecosystem on notice that new ways of doing business going forward will become a requirement.