A tight market turns soft  

Box lines stem the flow of sliding freight rates through blank sailings

By Penny Thomas

Dec 20, 2022

Al Dahna Express-2

Al Dahna Express in Southampton. THE Alliance has blanked the port call from its FE2 service. Photo: Shutterstock

The containership industry had a glorious run from June last year and well into 2022. A combination of an increase in consumer demand and supply chain snarls due to the Covid-19 pandemic, triggered freight rates to rise from the usual rate of around US$1,300-1,400 per day, to as much as US$11,134 (on 13 September), the benchmark Freightos Baltic Index (FBX) shows. The trend is now reversing, however, as economic recession, the war in Ukraine and other geopolitical drivers take hold of markets. Container freight rates have been falling since September, with rates now sitting back at around the more normal US$2,000-3,000 mark.

With consumer demand from east to west reduced, the oceans are awash with underutilised container tonnage. Larger vessels have been spotted sailing light. The world’s largest container vessel, Evergreen’s Ever Atop, sailed its maiden voyage at less than maximum capacity. The 24,004 teu vessel, which is being integrated into a Asia-North America route, transited the Suez Canal “apparently less than three-quarters full,” reported The Loadstar earlier this month.

Meanwhile, carriers operating smaller vessels have been struggling to operate at a profit, with UK-based Allseas Global Project Logistics, which opened a China to Europe service during the height of the boom, going into administration this month, reported TradeWinds

Keen to stay as liquid as possible, container lines are shoring up falling freight rates as best they can by introducingblank’ or ‘void’ sailings - when a vessel misses a port call or section of a planned voyage. Ports calls are expensive and time consuming and by missing out a port, or combining two services, considerable savings can be made for the owner or charterer. It also reduces oversupply. This is usual practice when capacity outstrips demand, and sends a clear signal that carriers are bracing for tougher times.

Maritime consultancy company Drewry reported that 100 sailings have been cancelled on major routes between 12 December and 15 January - 14% of the overall 724 sailings scheduled.

“During this period, 55% of the blank sailings will be occurring in the Transpacific Eastbound, 25% on Asia-North Europe and Med, and 20% on the Transatlantic Westbound trade,” said Drewry in its 9 December weekly report on cancelled sailings.

THE Alliance - Hyundai Merchant Marine, Hapag-Lloyd, Ocean Network Express and Yang Ming - is responsible for nearly half of the announced blank sailings. The foursome will miss 47.4 of a total 142.5 scheduled sailings during the next month.

One example of a blanked service  is THE Alliance’s FE2 round trip that operates between China and Europe.

FE2 service

Yang Ming’s FE2 service route. Credit: Yang Ming

According to the company’s website, both the UK port of Southampton and China’s Nansha New Port have been excluded from the schedule. MarineTraffic shows that the Al Dahna Express, which operates on the service, excluded both of these ports in its recent sailing.

Blank sailings 1

Southampton is a scheduled call for the Al Dahna Express but MarineTraffic shows the port was blanked

Blank sailings 2

Al Dahna Express skipped Nansha during a recent sailing

The largest container shipping alliance, 2M, made up of the world’s largest operators (Maersk and MSC) has announced seven void sailings. According to The Loadstar on 7 December, 2M is again”withdrawing their Shogun/AE1 Griffin/AE55 Asia-North Europe loop in the week before Christmas, due to “slowing demand”.”

2M regular Shogun/AE1 service going east. Credit: Maersk

One of the first vessels to be affected by the dropped AE1 sailing will be the MSC Istanbul. MarineTraffic shows that the vessel is currently following its regular route from Salalah, Oman to Hong Kong. With the vessel scheduled to arrive in Ningbo on 21 December the service will not run until after Christmas. 

Blank sailings alone, however,  will not be enough to mitigate against reduced cargo flows.

To bring the balance of supply and demand back in the carrier's corner, vessel layups are also on the rise, according to an October story in The Loadstar. It said: “According to the latest bi-weekly assessment by Alphaliner, in the two weeks to 10 October, the number of idled box ships jumped by 25 (112,161 teu) to a total of 76 vessels for 322,394 teu.”

Further, a swathe of brand new vessels is scheduled to come online in coming years, with 2021  a record year for yard order books. Owners flush with cash from high freight rates placed orders with the main intention of increasing capacity.

The Maritime Executive wrote in 2021: “Asia has led to a new record being set for the total containership capacity ordered in a single year. Just eight months into 2021, the orderbook has nearly doubled since the beginning of the year and stands at three-quarters of the all-time high reached 13 years ago.”

It’s therefore no surprise that to offset against the current oversupply and influx of new tonnage to come, shipbreakers are also seeing an uptick in business.

Earlier this month TradeWinds wrote that recycling beaches expect a number of vessel deals to be completed in the next few weeks. “Brokers believe that the first wave of container ships is likely to come from the owned fleets of liner companies, which held on to their older ships to ride through the bull run. Now that it is ending, they are trimming their fleets,” it said. 

As carriers continue their plans to address declining cargo demand, the rest of the industry must also deal with the fallout. In such an interlinked industry all players are affected - from ports and carriers to logistics companies and inland transport. 

In what should be a busy time of year for container carriers, the market is “a mess”, Peter Sand, Chief Analyst, at intelligence provider, Xeneta, told MarineLink, “with blank sailings, a free-fall in spot rates putting shippers in the driver’s seat”.

Real-time In-transit Visibility | MarineTraffic
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Penny Thomas

Account Manager at London based public relations agency, Navigate PR

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