Blank Sailings Will Continue Into the Third Quarter
Date: Tuesday, June 9, 2020
Source: Freight Broker Live
It was less than two weeks ago that we reported that blank sailings could be slowing down. Unfortunately, they aren’t coming to a halt any time soon. Two of the three main ocean carrier alliances began announcing blank sailings for the third quarter last week. THE Alliance and 2M have already cancelled 75 sailings between July and September. The third alliance, Ocean Alliance, has not officially announced its third quarter blank sailings yet, but has made a few cancellations.
In a joint statement, members of THE Alliance said that blank sailings would continue at least through September of this year. Haypag Lloyd, a member of THE Alliance, stated that, ‘The coronavirus pandemic is having a major impact on the logistics industry and will continue to cause disruptions for some time to come.’
Over one million TEUs worth of space have been idled due to the coronavirus. According to data from Alphaliner, 2M carriers make up over 850,000 TEUs of idle space. SeaIntelligence reports that nearly 20% of sailings have been cancelled between Asia-Europe trade lanes and North American lanes. The large number of cancelled sailings has kept rates artificially high.
A combination of factors are contributing to the large number of cancellations. One culprit is scrubber installation. Portions of fleets are being retrofitted to keep up with environmental regulations. But there is another issue at hand as well.
Blank sailings could also be a harbinger for low consumer demand and a subsequent sluggish recovery. In May, Dat.com’s Chief of Analytics Ken Adamo explained on State of Trucking how retail sales would likely be a long term bellwether for a turnaround, especially in preparation for the holiday season. It’s still early, but so far it looks like shippers are not seeing that improvement come to fruition just yet.
‘That we are now seeing full ships on some trades, and even cargo rolling in ports in Asia, is clearly an indication that too much capacity had been removed, but not an indication of a reversal to norm. If we were to see demand get back to normal – let alone be called ‘strong’ – we should see blank siblings be reduced to zero, which is obviously not the case,’ according to the SeaIntelligence Sunday Spotlight.