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Shipping Lines Use Blank Sailings To Maintain Rate Levels In Asia To Europe Trades

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Shipping Lines Use Blank Sailings To Maintain Rate Levels In Asia To Europe Trades

 

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Shipping lines are "blanking" – holding vessels from sailing – thereby reducing overall slots available to shippers, by up to 5 percent of capacity on the Asia to Europe trades according to consultants Maritime Strategies International (MSI).

Asian export cargo to Europe remains weak and is expected to only grow at the rate of around 2 percent this year, said the latest MSI monthly container shipping market report.

"The situation is not particularly great, but it's not unusual either," Daniel Richards, an MSI analyst told FreightWaves. He added, "The outlook is for more blanked sailings because the demand data is weak and port throughput is down, which should mean that the second and third quarter rates will pick up again."

According to the MSI report, carriers have announced nine sailings will be cut in May, totaling 115,000 twenty-foot equivalent units (TEU). With forecasts for moderate volume growth and with other scheduled sailings going ahead, the consultants expect vessel utilization to pick up in the coming weeks.

"However, it will take either a similar volume of blanked sailings, or else 5+ percent demand growth, to bring load factors [vessel utilization] back up to around 90 percent," MSI forecast in its report.

Richards said, "It's not a golden age of profit [for container shipping] and bunker [ship's fuel] costs are also going to hit shipping lines' profits, but even so it is reasonable to assume that freight rates will be between 5 and 10 percent higher than 2018 going into the peak season, in the third quarter."

The Freightos Baltic Daily Index for the China to Northern Europe trade hit a 12-month low at the end of March, at 1,029 points, but had picked up in April, reaching 1,207 by 21 April.

Rates declined some 15 percent mainly due to the Chinese New Year (a seasonal dip). The China to Mediterranean Freightos Daily Index also declined after the Asian New Year, recovering by 7 April to over 2,464 points before declining sharply over the subsequent two weeks to 1,487.

Freightos Baltic Index from February to April 2019, showing the decline in rates on the Asia to Europe trades after Chinese New Year.

Freightos Baltic Index from February to April 2019, showing the decline in rates on the Asia to Europe trades after Chinese New Year.

Image sourced from Pixabay

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Posted-In: Europe Freight Freightwaves Logistics shippingNews Markets General

 

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