The Asia/South America trade lanes have increasingly become the center of concern for steamship lines as they fight to contain continuing falling freight rates with a series of announcements for General Rate Increases (GRI’s). The decline in freight rate levels has come from an unprecedented increase in service capacity as lines seek trade routes locations for surplus Asia/Europe capacity, being displaced as larger newbuildings continue to be phased in. According to information provided from the PR News Service ComPort database, total weekly capacity on the Asia/West coast South America trade back in January 2013 amounted to just under 44,000 teu, but by August that figure had risen to almost 49,000 teu – an increase of almost 12%. Meanwhile, over on the Asia/East coast South America trade, the story is no different, with an almost 14% capacity increase recorded over the same January/August 2013 comparison period. According to ComPort, the total weekly capacity deployed back in January amounted to 36,345 teu, but by August that figure had risen to 41,300 teu – an increase of 13.6%. But there is more to come during the next three months as further larger capacity is phased in to the trade, and a home is finally found for the surplus Asia/Europe tonnage coming out, as the newbuildings continue to phase in. In addition to the build up of capacity on existing services, Mediterranean Shipping Co (MSC) has launched a new service - its own Asia/ECSA loop known as the Ipanema Service, which is presently deploying an extra 4,500 teu of weekly capacity. Naturally, as with any container trade when extra capacity is introduced, the freight rate sector becomes the subject of increased attention, and a volatile subject arena, and in the case of the Asia/South America trade, that is exactly what has happened. Most shipping lines involved in the Asia/South America trade have confirmed, average freight rates on the southbound route from China have “virtually collapsed”. Back in January, the average freight rate on the southbound route covering the East coast South Africa trade was US$3,700/feu, but by July, that level had fallen to an average of US$2,800/feu, just under 25% down on the start of the year figure. But while the gloomy situation for the lines continues on the southbound routes, the same is not being recorded so far on the northbound route back to Asia where rates have remained relatively stable, with US$1,500/teu from the East coast South America back into Asia remaining around US$1,500/feu. Of all the services now covering the Asia/South America trade, more than half deploy vessels of 8,000-teu capacity and above and incredibly all the larger ship capacity is being switched from deployment on the Asia/North Europe and Asia/Mediterranean trades. By way of comparison, at the beginning of 2013, all the services deployed vessels in the panamax capacity frame of 5,200 teu and below. In addition to the major concern being shown by shipping lines over declining resulting from allegedly overcapacity, there is a deep concern within that finding a home for “surplus” Asia/Europe capacity on the Asia/South America trade routes, should be closely examined before moving ahead. Countries in South America have not recorded significant GDP’s in recent years, and according to official statistics, any increase has remained in the single digit level, and shows little signs of changing. Some ports still suffer congestion problems, with the resulting schedule problems backfiring on the lines themselves. Critics are asking whether the redeployment of the surplus Asia/Europe capacity space somewhere such as South America, is the right decision, as other trades with apparently more market potential, are better placed to cope with additional capacity.