Trade Lane Deep Dive: The Trans-Atlantic
The trans-Atlantic has traditionally been a stable trade lane, and as the world finds its footing following the COVID-19 years, that reputation has not only remained intact, but it has been further entrenched. In 2022, the trans-Atlantic became the most profitable of the east-west trade lanes, according to Alphaliner, with sustained demand and elevated rates driving up the average per-mile revenue while the trans-Pacific and Asia-Europe routes struggled with fast-eroding volume and precipitous price declines. Heavy congestion at ports on both sides of the Atlantic was a feature of the trade lane throughout 2022, and the bottlenecks in North Europe and on the US East Coast remained deep into the fourth quarter, keeping ship utilization high and propping up rate levels. But the rally won’t last forever. Indeed, deteriorating economic conditions and rising inflation in the US are expected to put the brakes on demand, while port congestion will no longer delay vessels, and rates will fall. When trans-Atlantic demand and rates will return to normal — or what that normal will look like — is difficult to predict but few in the industry expect the bull run to extend deep into 2023.