The number of sailings cancelled by carriers in the 2-week period starting 28 September will be 6 times the number for the 2-week period starting 14 September. What does this mean for shippers?
Following the huge number of sailing cancellations triggered by the COVID-19 economic shock (up to 46 cancelled East-West sailings every 2 weeks in April), shippers have been relieved to see ocean carriers limiting the number of cancellations over recent weeks, to an average of just four, in each week of September.
But the shipping lines have now blanked a total of 24 sailings for the 2-week period commencing 28 September, according to Drewry’s Cancelled Sailings Tracker Report.
This period includes China’s Golden Week holiday (1-8 October), when factories shut down and container demand normally drops (see below):
Source: Drewry Cancelled Sailing Report
Given the already tight market conditions on the transpacific and Asia-Europe routes, Drewry provides here a brief assessment of the likely capacity situation during and after Chinese Golden Week by trade route. Further information is available in the data reports on cancelled sailings.
During the 2-week period from 28 September, 58% of the 24 cancelled sailings are on the transpacific route, 38% on the Asia-North Europe/Mediterranean route and only 4% on the transatlantic route.
Source: Cancelled Sailings Report
The sailing cancellations in the transpacific trade appear to be at a level in line with the seasonality seen in previous years.
The reassuring fact for shippers is that this reduction in capacity through blank sailings will only moderately reduce the capacity provided by transpacific carriers this October. Based on the Cancelled Sailings Tracker Report, carriers have increased total ship capacity from Asia to the East and West Coast of North America by 11% between September 2019 and September 2020.
It is probably not a coincidence that transpacific carriers are adding capacity back, as Chinese regulators said in September that they were asking carriers why transpacific rates had risen so much and are “hoping” to see more capacity offered to the transpacific market. The same cannot be said of the Asia-Europe trade.
Between September 2019 and September 2020, the total capacity of Asia-North Europe/Mediterranean route declined by 1%. This partly reflects less buoyant demand for Asian imports in Europe than in North America. The cancellations of sailings on the Asia-North Europe & Mediterranean this year appear to be higher than last year.
In Drewry’s opinion, access to capacity on the Asia-Europe route in October will be very tight and spot rates are likely to rise, whereas the situation of shippers is likely to ease on the transpacific route. A number of Drewry shipper customers have already been asked by their carriers or forwarders to pay price premiums or equipment imbalance surcharges on the Asia-Europe route to secure capacity.
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