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Leading global container liners have cancelled 117 sailings between December 26, 2022 and January 28, 2023 to halt a rate drop amid overcapacity and weak demand
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Members of three shipping alliances announced the blank sailings as Xeneta warns of “quiet before the storm” after its global index eased just 0.1% from November
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Despite the overcapacity, THE Alliance led by Hapag Lloyd is set to upgrade its fleet by deploying 23,500-TEU ships on the Asia-North Europe trade
Major liners are heading into 2023 with 117 blank sailings scheduled between December 26, 2022 and January 28, 2023, Drewry reports.
The announced blankings were out of a total 709 sailings scheduled for sailing between week 52 (December 26-January 1) and week 4 (January 23-28), Drewry Supply Chain Advisors said in its weekly update before Christmas Day. It said the blankings represent a 17% cancellation rate.
Trading and analytics platform Xeneta’s global XSI® fell to 419.8 in December, down just 0.1% from November, when the index fell 5.7% month on month. But it warns it could just be the “quiet before the storm” in 2023.
Drewry said the unwinding of the global freight rate upsurge caused by the pandemic comes with easing port congestion, slowing demand and increasing supply as new vessels “phase in” across trade routes and alliances, with capacity expected to exceed any volume growth.
Drewry said during this period, 54% of the blank sailings will occur in the Trans-Pacific East-bound, 24% on Asia-North Europe and Med, and 22% on the Trans-Atlantic West-bound trade.
The number of cancellations on the major East-West routes has siren 145% year on year, from 621 blank sailings in 2021 to 1,524 in 2022, with 45% of these occurring on the Asia-West Coast North American trade.
THE Alliance comprising Hapag Lloyd, ONE, HMM and Yang Ming, MOL, NYK, has announced 53.5 cancellations in the next five weeks.
Ocean Alliance grouping COSCO, OOCL, Evergreen and CMA CGM with 21.5 and 2M alliance of Maersk and MSC had 10 cancellations. For the same period, non-alliance services have implemented 32 blank sailings.
Despite the capacity glut, Hapag-Lloyd, ONE, HMM, and Yang Ming have settled on their April 2023 network plans that feature ship upgrades in Asia to North Europe, the Mediterranean, and the US East Coast services, according to Marine Insight.
Hapag-Lloyd reportedly mentioned the key highlights would include deploying its 23,500-TEU (twenty-foot equivalent units) newbuild ultra-large cargo vessels (ULCVs) on the Asia-North Europe trade lane to replace smaller ships.
In the week before Christmas, Drewry’s composite index eased 0.3%, the 43rd consecutive weekly decrease, and had dropped 77% the same week last year.
The latest Drewry WCI composite index of US$2,120 per 40-foot container (FEU) is now 80% below the peak of $10,377 reached in September 2021. It is 21% lower than the 10-year average of $2,693, indicating a return to more normal levels. The average composite index year-to-date is $6,461/FEU, up by $3,767 than the 10-year average.
RELATED READ: World container rates dip but still up 8% says Drewry
Xeneta said this is now the fourth month in a row that long-term ocean freight rates have dipped. Despite this negative trend, the XSI® remains 70% up year-on-year after a strong start to 2022.
“The narrative for the beginning of 2023 looks to be very different,” says Patrik Berglund, Xeneta chief executive.
“This is really just the quiet before the storm. As more and more long-term contracts expire in the new year, expect the XSI® to post far greater month-on-month declines. All indicators point towards considerable rate drops from today’s levels, with several of the major Far East trades pointing to new long-term contracts that are much closer to the far lower spot benchmarks.”
XSI® US Imports/Exports, the sub-index for US imports, rose 1.4% in December, though at 545.9 points, it remains below where it was in October. In November, this index fell 8.9% from October. Compared with December 2021, the index is up by 130.4%.
The XSI® sub-index for Far East imports saw month-on-month growth in December, up 2.3% to 214.4 points. The Far East import index is one of the few that has yet to see two months of consecutive decline. The sub-index for Far East exports fell 0.6% from November to 558.0 points, its lowest level since May 2022.
