Shippers will have to do more forward planning over the next six months as ocean carriers are expected to increase the number of cancelled sailings rather than withdraw whole services during the northern hemisphere’s winter season, as they await firmer details on the introduction of P3’s new services in the second quarter of 2014.
Maritime research company Drewry predicts more sailing cancellations over the next few months as the P3 alliance of Maersk Line, Mediterranean Shipping Co. (MSC), and CMA CGM has yet to disclose its intentions in any detail, and its competitors balk at radically reducing capacity in the interim for fear of losing market share.
The three container shipping lines have so far only outlined the number of East-West services they intend to provide from the second quarter of 2014, and are not expected to confirm details of port rotations and services sharing until the fourth quarter of this year. Competing carriers will thus not want to jeopardize market share before then, but have noticeably been increasing their sailing cancellation announcements every week, noted Drewry.
In the trans-Pacific trade lane from Asia to the West Coast of North America, 12 sailings have been omitted in September and another 12 so far in October, resulting in vessel capacity reduction by about 2.8 percent in September, and by at least the same amount in October. This, said Drewry, will help to get average vessel utilization back up to around 90 percent, putting ocean carriers in a better freight rate negotiating position.
On the Asia-Northern Europe trade lane, six sailings have been cancelled in September, and another five are lined up so far in October. On the Asia-Mediterranean route, seven were omitted in September and six have so far been announced for October.
“The trend means that shippers need to pay more attention to forward planning over the next six months, rather than assume that a contracted carrier will usually have a vessel offering the right port pairs on the right berth at the right time,” advises Drewry. “Ocean carriers have got used to temporarily regulating vessel capacity supply to match uncertain demand over the past 12 months, so the requirement for more vigilance over schedules is not new; only its importance is escalating.”
The timing of cancelled sailings will, presumably, continue to be planned around general rate increases, as figures show that when sailings are seriously omitted, freight rates usually jump up, added Drewry.
As other ocean carriers wait for the P3 alliance to clarify its intentions, they are already exploring several options, said Drewry. Among these is considering more serious capacity reductions in the second quarter of next year and the introduction of further slow steaming. The G6 is said to be looking into extending the scope of the alliance to trade lanes outside of Asia-Europe and Asia-East Coast of North America.