-
98 sailings across the major transpacific, transatlantic and Asia-North Europe & Mediterranean routes have been cancelled by ocean liners between this week, February 6-12, and the week March 6-12
-
The cancellations make up 14% of 693 scheduled sailings during those two weeks
-
Drewry’s WCI composite index is 24% below the 10-year average of $2,693, indicating a return to more normal prices, but still 43% above 2019 rates of $1,420
Ocean liners have cancelled a total of 98 sailings amid soft market demand on the major transpacific, transatlantic and Asia-North Europe & Mediterranean trade routes between this week, February 6-12) and week 10 (March 6-12), according to Drewry Supply Chain Advisors.
This week’s blanked sailings represent a 14% cancellation rate from a total of 693 scheduled voyages, Drewry said in its weekly analysis on February 3.
Container carriers resorted to cancellations late last year to in an attempt to halt a steady slide in shipping rates and still do so even though prices had fallen to normal levels.
Danish ocean container line Maersk confirmed the cancellations indirectly in its Asia Pacific Market Update for January that it issued on February 3.
“As markets remain volatile, we’re ready to adjust to sudden shifts in inbound and outbound business,” said Morten Juul, Asia Pacific regional head of ocean management at Maersk.
“We will continue to make capacity adjustments on services to North America, Europe and the Mediterranean over the next several weeks due to reduced demand actuations as a result of the Lunar New Year holidays,” Juul said.
During this period, 62% of the blank sailings will occur in the transpacific eastbound, 29% on Asia-North Europe and Mediterranean, and 9% on the transatlantic westbound trade.
Drewry said that for the next five weeks, THE Alliance has cancelled 45 sailings, followed by Ocean Alliance and 2M with 22 and 11 cancellations, respectively. During the same period, 20 blank sailings will be implemented in non-Alliance services.
Maersk said its service cancellations include rebooking cargo on alternative services and blank sailings amid soft market demand.
“Our overall goal remains to provide our customers with predictability and to ensure minimal disruption to their supply chain by supplying alternative routings and coverage for the affected vessel positions,” Juul said.
Transatlantic westbound trade remains isolated from major market developments seen in the larger East-West trades.
Ocean carriers are adding more capacity to the trade to take advantage of the still elevated spot rates, although decreasing in North Europe, they are doing so at considerably slower pace to other trades. This week, WCI Rotterdam-New York index dropped just 3% year on year and 1% month on month.
Extra capacity year on year and greatly reduced port congestion will likely put downward pressure on rates, especially if port congestion continues to ease.
Drewry said its AIS port dashboard points to a recovery across ports on the East Coast of North America with average waiting time falling month on month from August 2022 (when it was 3.73 days) to just 1.01 days in January 2023.
In its weekly container rate update last Thursday, Drewry said its composite World Container Index decreased 1% to US$2,033.70 per 40 feet equivalent units (FEU) container last week, reflecting a 78% drop when compared with the same week last year and is now 80% below the peak of $10,377 reached in September 2021.
The index is 24% lower than the 10-year average of $2,693, indicating a return to more normal prices, but remains 43% higher than average 2019 (pre-pandemic) rates of $1,420.
The average composite index for the year-to-date is $2,085/FEU, which is $608 lower than the 10-year average.
Freight rates on Shanghai-Genoa dropped 2% or $51 to $2,727/FEU. Spot rates on Shanghai- Los Angeles and Shanghai-Rotterdam slid 1% each to $2,056 and $1,732/FEU, individually.
Similarly, rates on New York-Rotterdam and Rotterdam-New York fell 1% each to $1,197/FEU and $6,262/FEU. However, rates on Los Angeles-Shanghai rose 1% to $1,137/FEU.
Rates on Rotterdam-Shanghai gained 3% to $786/FEU. Rates on Shanghai-New York hovered around the previous week’s level. Drewry expects small week-on-week rate reductions in the next few weeks.
