Asia sea freight challenges

The traditional squeeze in space in the run up to Chinese New Year is just weeks away and there’s already some evidence that rates may already be hardening…….

Traditionally as the 3rd quarter peak season has receded the shipping lines have cut their service schedule and blanked sailings to reduce capacity as demand starts to wane.

As the year came to a close it was clear that there would not be any serious reductions.

A real concern is that carriers may announce a significant number of blank sailings in the short term – possibly in the run up to CNY – to try and address the 5% over-capacity. Experts predict this would require the blanking of 12 additional average-sized sailings and would almost certainly lead to a backlog in cargo

Across the combined Asia-Europe and trans-Pacific trades, capacity has contracted by just 2% in 2017, a fraction of the 6%-15% capacity contraction experienced in the past five years, which means that excess capacity remains in place as we start 2018.

According to SeaIntel, if liner strategy over the past five years is used as a guide, operators should have blanked 25 sailings on the Asia-Europe trade and a huge 67 average-sized sailings on the Transpacific to bring any semblance of balance to the market.

“MIQ Logistics can protect you from sea freight rate fluctuations, so you can plan your year with confidence”

The analysts calculate that a total of 193,000 TEU would have to have been blanked over the entire Q4 period, equal to the blanking of 13.5 average sailings, or roughly one sailing per week.

The lack of cancelled sailings is surprising after the disciplined capacity management that we saw in the first half of 2017, which turned around several years of losses for the biggest lines.

“Ensure that you are ready: From the 15th to 21st February your suppliers and manufacturers will shut down for China New Year”

If trade follows its seasonal patterns we would expect to see volumes decline until February, even with a volume spike before Chinese New Year.

During that period the global container fleet is expected to continue growing, adding even more capacity!

MIQ Logistics in the UK and Asia will continue to monitor the situation and leverage shipping line contacts to ensure that we get the earliest intelligence on any developments