Ocean carriers announce new blank sailings

Date Added: 13 September 2022

Ocean carriers announce new blank sailings

With our portfolio of international oceanfreight forwarding services, Davies Turner notes that the Loadstar publication reported last week that ocean carriers will withdraw around 8.8% of capacity on the Asia-Europe route over the next 12 weeks. CMA CGM announced it will blank five sailings in the period surrounding China’s Golden Week, removing close to 100,000 teu from the Asia to Europe trades. In addition, the 2M Alliance will pull 10% of its capacity on the trade between now and the Chinese holiday, blanking seven sailings, while THE Alliance pulls 18%, blanking 10 sailings.

According to The Loadstar, the reduced freight capacity from Asia Europe could be explained by the reduced demand during the peak season this year which has likely driven the lines to reduce capacity as they look for ways to maintain rates that have recently “collapsed”, particularly on Asia-Europe routes.

The Loadstar report indicated that the demand outlook is very poor going into the fourth quarter and it is possible that carriers will adopt the same radical approach as they did at the start of the pandemic and take out a huge amount of capacity to protect and, as it proved then, boost their rates.

The blank sailings announcements must be put in parallel with the record-high earnings of ocean carriers: According to an analysis by Blue Alpha Capital founder John McCown and reported by the Loadstar, the industry produced a cumulative net profit of USD59.3 billion in the first quarter, after a surplus of USD52.5 billion in the final period of 2021.

And ocean carrier results for the second quarter have all shown a quarter-on-quarter improvement, with, for example, Maersk posting a profit of USD8.6 billion, compared with USD6.8 billion in the first quarter.

Therefore, favouring very high rates by reducing capacity over European connectivity will be detrimental for carriers’ customers, considering that their service quality has shown no signs of improvement since the start of the pandemic.

For more information about Davies Turner’s ocean freight forwarding and logistics services, please contact ocean@daviesturner.co.uk or visit https://www.daviesturner.com/ocean

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