Sea-Intelligence forecasts 16% increase in global TEU*Miles due to Red Sea crisis

According to Sea Intelligence, the global TEU*Mile increased by 16% as the Red Sea crisis required a corresponding 16% increase in capacity and service providers had to find ways to accommodate this spike.

container ship

After shipping lines' service networks were rerouted to incorporate the circum-Africa route, Sea-Intelligence's standard model for estimating demand in TEU*Miles (TEU*Miles) was used to assess the potential impact in 2024.

In 2023, the global TEU*Miles will reach 860 billion. Moving to a scenario where the same volume of goods is shipped worldwide in 2024 but with diversions around the Cape of Good Hope, this would result in a projected demand of 994 billion TEU*Miles. This represents an increase of 16%.

“As we can see from Figure 1, the Europe-Indian Subcontinent trade is by far the most impacted. The trade between the Far East and North America is the least impacted overall, but this is because the impact is volume-weighted, and of course, the distances from the Far East to US West Coast are not impacted and neither is the distance from the Far East to US East Coast via Panama,” said Alan Murphy, CEO of Sea-Intelligence.

According to Sea Intelligence, a 16% increase in global TEU*Miles requires a corresponding 16% increase in capacity. Service providers can respond to this spike through two main ways:

First, by absorbing existing excess capacity, which is expected to be exacerbated by the provision of additional capacity throughout 2024

Second, by increasing vessel speeds to allow the same vessel capacity to transport more TEU*Miles per year

Currently, both approaches are being implemented. It is predicted that by 2024, continued increases in additional capacity will likely be used to slow down today's vessels somewhat.

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