Overcapacity on Asia–South America (West Coast) Lanes Disrupts Alliances and Rates

Carriers operating the Asia–West Coast South America trade are confronting a sharp rise in overcapacity, prompting many to reconsider vessel-sharing agreements (VSAs). The deployment of large new vessels by carriers such as MSC, Evergreen, and others has created excess tonnage, estimated at around 33% above demand on major routes like Shanghai to Santos, causing spot freight rates to fall by approximately 26%.

Faced with plummeting rates, several shipping lines are moving away from traditional alliance services to operate independent stand-alone services, aiming for tighter control over capacity and schedules.

Forwarders are raising concerns that this unravelling of collaboration could exacerbate volatility in rate management and booking reliability.

As competition intensifies, forwarders warn of deepening financial strain across the trade lane unless carriers re-align vessel deployment to market demand. The situation underscores how overzealous capacity and can rapidly erode market stability unless balanced by coordinated industry responses.