Spot freight rates have decreased continuously over the past several months. In response, shipping lines face two possible strategies.

One option is to increase the number of blank sailings, reduce supply and prevent a decline in spot rates. What remains is that despite falling prices, spot freight rates are still much higher than before the Red Sea crisis and pre-pandemic levels, which would potentially incentivise shipping lines to book as much cargo as possible at current rates, to capitalise on this.

“The latter would dissuade the blanking of sailings but will lead to more rate erosion in the longer term,” Sea-Intelligence said in a report.

 

Sea-Intelligence: The number of blank sailings decreased sharply

Source: Sea-Intelligence.com, Sunday Spotlight, issue 660


In recent weeks, the number of blank sailings on the Asia-North Europe, Asia-North America East Coast and Asia-Mediterranean routes has dropped significantly. However, the sharp fluctuations in these shipping lanes present a challenge for determining whether the decline is a new trend or simply part of normal fluctuations.

In contrast, on the Asia – North America West Coast route (as depicted in Figure 1), a consistent pattern has emerged since 2022, showing a gradual decrease in no-shows. This trend will continue into 2024, with the number of blank sailings now almost zero. Even when applying a four-week operating average to minimize fluctuations on all four routes, the underlying trend remains consistent: the number of blank sailings has dropped sharply in recent weeks.

“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. 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 a continued downward pressure on spot rates,” said Alan Murphy, CEO of Sea-Intelligence.

 

Source: Phaata.com (According to Sea-Intelligence) 

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