January offered carriers a relatively solid start to the year. According to the market analysis for Q1 cited by Container News, the quarter began on a positive note, supported by constrained capacity and strong fleet utilization. This is important because it shows that the market was not weak from the outset – it deteriorated over the course of the quarter.
The situation eased in February, as the usual slowdown from the Chinese New Year reduced industrial activity and freight momentum. This seasonal lull alone would not have been remarkable. What changed the tone was what followed. In March, the market was segmented by tensions in the Middle East, maritime disruptions, and rising energy costs, darkening short and medium-term prospects.
At the same time, the fleet continued to grow. Data from Alphaliner reported by Safety4Sea showed that the “fully cellular” container ship fleet exceeded 6,700 vessels by early April, while total capacity reached 33.6 million TEU. The Far East-Europe weekly capacity also set a new record in March. Thus, even though disruptions tightened short-term effective capacity, the underlying supply continued to build up.
This is what made the quarter so unstable. The market was pulled in two directions – disruptions maintaining tighter conditions than they would have otherwise, while fleet growth continued to build underlying pressure. It is a much more revealing story than simply saying Q1 was “dynamic.”
The disruption in Hormuz added an additional layer of tension. In its March market outlook, BIMCO indicated that attacks against Iran from February 28 had effectively interrupted transits through the Strait of Hormuz, leaving around 130 container ships stranded in the Gulf and affecting about 5% of global ship demand. In other words, this was not just background noise – it directly disrupted how ships could be deployed.
Despite this, freight rates did not collapse. Drewry’s World Container Index remained unchanged at $2,287 per 40-foot container on April 2, with Asia-Europe rates generally stable. This suggests that carriers were still able to manage capacity tightly enough to avoid a more widespread rate decline, despite market turbulence.
But the situation worsened in terms of costs. Drewry noted that bunkering fuel availability was tightened due to disruptions around the Strait of Hormuz, and carriers were responding with speed reduction (slow steaming), alternative bunkering plans, and emergency fuel surcharges. Thus, even though rates were not collapsing, the operating environment was becoming more expensive and challenging to manage.
Container News also pointed out that shipping lines continued to order ships despite the volatility, with a preference for dual-fuel and LNG-compatible vessels.
