Blank sailings wreak havoc on supply chains, leaving mid-market shippers scrambling
According to an article published on JOC.com after this year’s TPM, U.S. importers and exporters will experience more blank sailings through spring 2019. “Carriers have already announced 35 blank sailings through February and into early March,” the article said. The same period in 2018 saw only 11 blank sailings.
Blank sailings—scheduled sailings canceled by the carrier in order to reduce short-term supply—result in greater demand on the ships that do sail, create havoc at trans-shipment ports that are skipped, and cause uncertainty in scheduling, especially in the Transpacific trade.
Why now? It’s simple: Carriers have learned how quickly they can manage capacity to maintain higher use of existing vessels and maintain upward pressure on pricing.
“It’s a similar practice to how airlines manage capacity to maintain full flights and elevated rates. The difference with ocean carriers is that these services are weekly, not hourly, and so any cancellation has real ripple effects throughout the supply chain. In some cases, carriers are canceling services with as little as three weeks’ notice, so there is very little predictability,” says Michael Van Hagen, VP Sales and Marketing at Laufer Group International. “We’ve never seen carriers act this aggressively to manage capacity, especially in periods of high demand, like last September and October when importers were scrambling to get as much cargo to the U.S. as possible to avoid the January 1 increase in tariffs.”
And according to what carriers are messaging, these current practices are not likely to change any time soon.
So, what can you do to prepare?
1. Understand your allocations with your carrier, NVOCC and/or logistics partner.
2. Provide monthly forecasts to your logistics partner and pre-plan accordingly.
3. Be flexible. Understand that your first choice may not be available, so be willing to quickly accept option B or C.
4. Have a strategy before your season starts; don’t try to navigate logistics on a shipment by shipment basis.
5. Understand the Alliances that you are shipping with and have your logistics partner diversify among at least two of the three primary Alliances in the TP trade.
6. Communicate internally to your team so they are educated and understand the challenges.
With its international contacts and deep industry expertise, Laufer can help you work with unexpected schedule changes, providing cost-effective solutions designed to leave your supply chain with fewer interruptions.
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