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Photo 29000630 © Xuejingwen | Dreamstime.comBy Gavin van Marle
18/04/2024
With the Red Sea crisis continuing to artificially prop up container spot rates, carriers have largely abandoned the tactic of using blank sailings to adjust supply to suit demand, according to new analysis from Sea-Intelligence.
The structural overcapacity faced by the liner industry has, to a large extent, been mitigated by the Houthi attacks on Red Sea shipping forcing vessel diversions around the Cape of Good Hope.
And while these have directly hit Asia-North Europe, Asia-Mediterranean and a selection of Asia-US east coast services, a ripple effect has seen the impact stretch to other trades.
“On Asia-North America west coast there is a clear systematic trend, since 2022, of a gradual reduction in blank sailings, which has continued and shows a level now approaching almost zero,” said Sea-Intelligence CEO Alan Murphy.
“Even if we take a four-week running average to smooth out the volatility, the underlying trend is the same – a sharp drop in blank sailings in recent weeks,” he added.
Given that blank sailings had been the industry’s prime tool to address sharply declining freight rates, their absence indicated that carriers appeared to have prioritised short-term revenue gains, argued Mr Murphy.
“This suggests that the spot rate decline in itself is not the focal point, as present spot rates are significantly higher than pre-Red Sea crisis, as well as pre-pandemic,” he said.
“Keeping this in mind, and by looking at the blank sailings data, it seems that in the present market environment shipping lines are attempting to capitalise as much as possible from the relatively higher rates, by not curbing capacity.
“The likely result, however, will be continued downwards pressure on spot rates,” he added.
Numbers from the eeSea liner database support his assertion: of the 180 advertised sailings on the Asia-North America west coast for April, 11 have been blanked, and 11 of the 190 advertised for May are set to be blanked.
On the Asia-North Europe trade, just five sailings this month are set to be blanked, out of 84, while for next month, so far not a single blanking has been announced out of the 92 advertised sailings.
It is a similar picture on the Asia-Mediterranean trade: six blankings in April, out of a proforma 95 sailings, and six blankings of 102 sailings so far announced for May.
There are still some blanked sailings – or slidings – taking place, however these largely appear to be due to issues in ports rather than attempts to affect spot rates.
Today, MSC announced that next week’s sailing of the 2M’s Asia-Europe AE55/Griffin sweeper service would be subject to sliding, due to “the ongoing challenging market situation generating congestion and schedule delays across the supply chain”.
The key question of course is what carriers will do should the Red Sea crisis ends, and the true depth of overcapacity is revealed – although given the seizure of the MSC Aries over the weekend, resolution of the conflict appears further away than ever.