It has almost become traditional for shipping lines to blank sailings in the demand lull after China’s Golden Week holidays, but the carriers blanked sailings have been mitigated by easing European port congestion.
Post Golden Week capacity reductions on the Asia to North Europe trade lane are removing almost 20% of available volume, which is in line with 2019, but higher than the 2014-2018 average.
Overall capacity reductions to the US east and west coasts range between 22% and 28% of deployed weekly capacity in the weeks following Golden Week, up 50% on 2019, and well over double the average of 2014-2018.
Global port congestion has dropped to 10.5%, from a peak of 15% in March and the release of so much capacity from port congestion has negated much of these initial capacity reductions.
Container shipping analysts suspect that he carriers are unwilling to take out capacity in any serious way, because blanked sailings have been completely ineffective in protecting rates and that permanent capacity withdrawals may be required.
The latest round of capacity cuts planned on the US west coast account for less than 7% of total trade capacity, while east coast cuts are under 2%, part of the capacity withdrawn will be returned to fill gaps in the remaining services and many smaller carriers continue to service the transpacific.
(NOTE – These figures do not take into account subsequent blanked services announced by 2M)
The challenge for the major container shipping lines is that the ‘opportunity’ cost of withdrawing capacity is too high for many, with charter rates to cover and new vessel order-books.
In addition carriers deciding to cut big chunks of capacity to underpin short-term rates need to be careful not to fall foul of the minimum service levels the agree in their long-term contracts with shippers and forwarders like Norman Global Logistics.
With so much uncertainty, we would urge you to share your forecasts, book shipments ahead of time, or contact us directly, if you have urgent or critical consignments EMAIL us now.
We negotiate contracts with carriers across all three alliances to secure space and rates, that provide the best blend of alternatives and options, whatever the situation.
By leveraging contracts and relationships we adapt services, port pairs and routings, to work around blanked sailings and maintain the resilient, reliable supply chains that best serve our customers.