The cancellation of multiple October sailings from Asia to Europe is an attempt by the carriers to push capacity down and raise rates, but if they fail, they may not have another opportunity to significantly raise prices before Chinese New Year, next February. 

Container shipping lines across the three alliances have announced additional blank sailings ex Asia to North Europe and the Mediterranean, around the Chinese Golden Week holiday in the first week of October, and through to the end of the month.

According to data from Sea-Intelligence, the capacity operated on the Asia-Europe trade in September is 10% higher than last year and on the Asia-Med service it is 27% more and while the carriers are planning significant capacity cuts after Golden Week, we are wary of unannounced blank sailings in the coming weeks.

Overall 14% of scheduled sailings have been cancelled from mid-September to mid-October and this we expect are announcements to counter balance the lower demand during China’s Golden Week holiday.

The current blanking represents Ocean Alliance (5%) and THE Alliance (7%) with MSC blanking SWAN service weeks 38-43 removing 45k TEU of capacity.

MSC has radically cut capacity on the Mediterranean lane between weeks 40 and 43, but it is not clear whether HMM will blank any sailings of its Asia, India to Mediterranean standalone loop that launched in August.

The aggressive blanking announced by all three alliances means it may be challenging to find space for exports from China to Europe next month, which is why we recommend that you share shipping forecasts as early as possible, so we can reserve the space you need.

There will also be the knock-on effect of limited export sailings from North Europe during November and December, which underlines again the importance of shipping forecasts.

Carriers will, of course, be looking to raise rates on backhaul trades, as prices for oil have surged to $90 a barrel, with December Brent Crude now priced at around $95, driven by OPEC’s supply cuts, which have been extended to the end of the year.

The price of Rotterdam-sourced industry-standard low-sulphur fuel (VLSFO) jumped on Friday by another $8 per ton to $643 and has now increased by 22% since the end of June.

We are watching closely…

Whatever the market challenges are, our sea freight team keep our customers’ cargo moving, finding capacity and alternative services in the event of unforeseen blankings. 

Providing us with regular forecasting, helps us to understand critical dates and intended volumes, so that we can secure the right amount of capacity to keep your supply chains running. 

If you have any questions or concerns about your Asia supply chain or the developments outlined here, please EMAIL our Chief Commercial Officer, Andy Smith.

Shipping lines have cancelled almost 30% of pre and post Chinese New Year sailings from Asia, with THE Alliance cutting 36% to Europe and diverting backhaul sailings around the Cape of Good Hope, which adds two weeks transit time to China. 

In a normal year, the weeks building up to China’s Lunar New Year holiday see a spike in export shipping demand from China to most global destinations, including the UK and Europe, as orders are shipped before the factories close and production halts. This year, however, there has been no demand spike and carriers across the three alliances have cut 15 westbound departures, with just 69 ships departing on a round-trip to North Europe or the Mediterranean since the beginning of the year and the start of CNY. 

In the period from 1st January to 17th February, Alphaliner calculated that the three big carrier alliances are planning to skip 27% of their originally scheduled Asia – Europe sailings.

Across the Alliances, there has been a 29% reduction in the number of 2M sailings in the first seven weeks of the year, while OCEAN Alliance has reduced the number of westbound voyages by 23% and THE Alliance has cut most sailings from the Far East to Europe, with a 36% reduction. This is partly due to the fact that their carriers are diverting more backhaul sailings from the Suez Canal to the Cape of Good Hope, which adds two weeks to vessel arrivals back in China.

The shipping lines have also been creating roll pools, so that vessels leaving during the CNY holidays have boxes to load, while factories are closed. This occurs every year but, with less demand, it is having less impact than the previous three to four years.

Despite all the cancelled sailings and diversions, Hapag Lloyd has announced a new Asia-Europe service, FE9, that is actually a slot charter agreement with an alliance competitor, CMA-CGM.

Prior to the current three alliance setup, the shipping lines operated a complex web of slot charter agreements and it seems likely that the current high sailing cancellation levels are reducing service coverage, and an obvious solution for a carrier is this type of cooperation, that we may see accelerate in the wake of the 2M break between MSC and Maersk as they part company at the end of their 10 year agreement.

The 2M break may even result in a reshuffle of alliances, as carriers reshape the industry over the coming years on all trades. Although the focus has always been on the lucrative Asian markets - the transpacific and westbound European trades are the largest volume global lanes- one thing is for sure, there will be a lot more change, as a consequence of the unravelling situation in container shipping. It looks like a case of 'from boom to bust’ – although hopefully not quite so dramatic as we saw with Hanjin in 2016.

We work closely with our partners in China to monitor which lines are rolling cargo, and use our space agreements across all alliances wisely to ensure our containers are always lifted, though expectations are that roll pools will be cleared through weeks 5 to 8.

To learn how we can help you avoid blanked sailings and rolled cargo, or to request our regular ocean market report, please EMAIL our chief commercial officer, Andy Smith, who can advise on the best solutions for your ocean supply chain. We will always deliver the most appropriate service in an ever disrupted market and provide all options available to ensure that your product reaches the right destination, at the right time and at the right cost. Considered solutions are what we achieve.