Container shipping lines blank sailings to cope with falling demand

Container shipping lines cancel trips to cope with falling demand

According to the latest report from Project44, ocean carriers are using the strategy of canceling more sailings to respond to the drop in demand.

The logistics and supply chain technology platform's Ocean Carrier Report in June said the 2M alliance of Maersk and MSC was "the most aggressive, cutting back its services by as much as 71% in the second week in May".

“With ocean freight spot rates in freefall and demand for containers down year on year, carriers have moved to protect profitability,” said Project44.

Project44 suggests "other tactics", including more slow-steaming, that would be used by shipping lines to consolidate rates and mitigate the impact of rising fuel costs.

Furthermore, the Project44 report notes a growing trend of carriers diverting ships to “more profitable” routes, making some routes appear to be “ghost” services – practically no sailings are available.

“Vessel nominal teu capacity data shows there’s more tonnage available, but carriers appear to be putting the brakes on softening spot rates by tightening up supply on certain routes while switching tonnage to the most profitable tradelanes,” said Josh Brazil, Vice President of Supply Chain Insights at Project44.

Meanwhile, cargo lead times are improving, as port congestion eases and transhipment rollovers are decreasing, according to Project44.

“Vessel delays across three main tradelanes – Asia-Europe, transpacific and the transatlantic – all showed signs of improvement from the horrific months of January, February and March, which were the worst months for shippers,” said Project44.

Project44 said that carriers "able to get to grips" the transshipment situation last month with a monthly downward trend, "Industry-wide, transhipment rollovers have decreased by 26.5% from a peak of 53% in January.”

Upcoming forecasts, Project44 data show that the number of blank sailings will decrease in the coming weeks as carriers get ready for the start of the annual peak season.

According to Project44 data, Evergreen shipping line will have the lowest average number of blank sailings in the early to high season, such as this Taiwanese carrier that says only 12% of sailings will be blanked next week.

According to Project44, shipping line HMM is expected to cancel a lot of sailings in July.

However, an HMM spokesperson said: “In July, HMM will try to keep and provide liner services as much as we can".

“As a member of THE Alliance, we have made comprehensive efforts to improve voyage productivity in cooperation with the other member lines".

“HMM and THE Alliance also suffer from voyage losses caused by severe congestion in the major ports. However, there are certainly no intentional void sailings,” he added.

Project44's ocean carriers report identifies the Ocean Alliance as "the most aggressive" in "pushing for market share" by keeping the number of blank sailings below the industry average.

However, the Ocean Alliance may also be forced to step back from gaining market share as expected, as fears of inflation and tight monetary policy dampen global demand.

Referring to the data published in the Container Trade Statistics, negative 4.2% growth in global demand in April, Project44 said the drop in demand is reflected in the data. is "hovering at similar levels to April 2019, before the dramatic collapse associated with the pandemic".

Source: Phaata.com (According to The Loadstar | Gcaptain)

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