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Portcast Insights
Sreelakshmi H K
June 15, 2023
2
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Navigating The Current Blank Sailing Situation in Ocean Freight

Gain a deeper understanding of blank sailings, why they happen, the causes for the current blank sailing situation, and how to navigate the challenges it presents through proactive measures.
Bank Sailing in Ocean Freight

The current supply and demand imbalance in the shipping industry is leading to an increase in blank sailings. Blank sailings occur when carriers opt to skip ports or entire legs of their scheduled voyages in response to fluctuating demand and capacity. This practice has significant implications, including delays in delivery times and placing strain on the relationships between retailers and customers who rely on timely order fulfilment.

Why Do Blank Sailings Happen?

Shipping companies decide to cancel or omit a scheduled voyage due to various factors. These factors may include seasonal fluctuations in demand, imbalances in trade flows, port congestion, labour disputes, adverse weather conditions, or unforeseen events like the COVID-19 pandemic.

Blank sailing aims to manage vessel capacity in response to these dynamic market conditions, preventing overcapacity and maintaining freight rates.

Impact of Blank Sailings on Business

Blank sailing poses significant challenges for businesses relying on ocean freight for their supply chain operations.

  • It disrupts the timely delivery of goods, leading to potential stock shortages, production delays, and customer dissatisfaction.
  • The uncertainty surrounding blank sailing makes it difficult for companies to plan and manage their inventory effectively.
  • The lack of visibility on skipped ports and cancelled schedules creates additional costs for the shippers.

The Reason for the Current Blank Sailing Situation

During the months of March, April, and May, blank sailings were prevalent. In April, ocean carriers took proactive measures by implementing ad-hoc blank sailings in trans-Pacific vessel services to bolster spot rates. However, in May, carriers adopted a more consistent pattern and reduced the frequency of cuts.

This may seem puzzling — how can we observe a significant number of cancelled sailings without a notable decrease in deployed capacity? However, the explanation for this apparent contradiction is quite simple.

Carriers introduced numerous new scheduled sailings in 2021/2022 to meet growing market demands. However, supply chain bottlenecks caused many vessels to become stuck in port queues, rendering them unavailable for departure. This resulted in a significant number of cancelled sailings, despite the increased capacity on paper.

In any case, these blank sailings have prevented a further decline in spot rates by managing capacity deployments, which has been crucial in preventing freight rates from dropping below break-even levels for carriers.

June 2023: Blank Sailings at a Glance (Weeks 24 - 28)

Between June 12th – July 16th, the blank sailings for different alliances and trade routes are as follows as per Drewry report:

  • In the major trade routes between East and West (Transpacific, Transatlantic, and Asia-North Europe & Med), 30 sailings have been cancelled out of 680 scheduled sailings, representing a cancellation rate of 4%. 
  • During this period, the highest percentage of cancelled sailings, 67%, will occur in the Transpacific Eastbound trade. The Asia-North Europe and Med trade will experience 27% of the cancellations, while the Transatlantic Westbound trade will have 7% of the sailings cancelled.
Trade Route Highest Number of Blank Sailings in %
Transpacific Eastbound 67%
Asia-North Europe and Med 27%
Transatlantic Westbound 7%
  • Looking ahead to the next five weeks, THE Alliance has announced 14 cancellations; OCEAN Alliance has announced 7, and 2M has announced 4 cancellations. Additionally, non-Alliance services will have 5 blank sailings.
Alliance/Service Number of Cancellations/Blank Sailings
THE Alliance 14
OCEAN Alliance 7
2M 4
Non-Alliance 5
Total 30

Although blank sailings have become more organised compared to the previous ad-hoc cancellations adopted by carriers earlier this year, they are still being implemented as a means to stabilise market rates and create upward pressure on rates in specific trade routes. The overall surge in market demand, supported by carriers' implementation of blank sailings, is driving higher rates. Here is a summary of the current ocean freight rate situation for Asia-Pacific exports in June 2023.

ASPA-EURO The trend on this trade remains healthy and positive and is expected for June as well. Carriers are slowing down the blank sailing program accordingly.
ASPA-AMNO Carriers are expected to implement a GRI on 1st June to bring the FAK up to healthier levels. The situation globally is stable on both the East and West Coast with vessel dwell at normal levels.
ASPA-AMLA After a surge in trade volumes and a hike in rates in May, there are some signals that the market will stabilize, though remain strong. Utilization to the ECSA has been in the high 90% range, which enabled the carriers to increase FAK rate levels during May, however, some corrections have been already made. Carriers continue preferring to work on short-term rates, rather than locking into long-term rates in the hope that the market volumes will not fall. To WCSA/Mexico, ships enjoyed filling degrees of over 100%, leading to rolling of cargoes. Rates were pushed over the $ 3,000/40’ on the FAK market. Additional capacity has been deployed to cope with the high demand of the market. Looking forward, we expect that the market will soften in the coming weeks and rates will decrease again.
ASPA-MENAT Overall increased market demand is pushing rate increases, also supported by carrier’s blank sailings. East MED market is strong, but GRI plans are not taking flight due to small carriers' additional capacities and overall capacity is still sufficient to take the market volume. Africa market momentum is also stronger especially to West Africa and to an extent East Africa. GRIs for West Africa at USD 200-300/TEU. South Africa's rates are still softening but carriers' space utilization is showing stronger pick up. Overall equipment situation is relatively under control in Asia but 20’ GP shortage can be observed especially from North China.
ASPA-ASPA Carriers are still reporting 80-90% utilization therefore some carriers have implemented GRI locally. However, the success of GRI remains uncertain as there are new services being launched and revamp of old services. In general, rates for China to South-East Asia and vice versa are relatively stable compared to other sectors. For IPBC, exports are picking up and rates into India East Coast are increasing while rates remain relatively stable for India West Coast. Despite export volume picking up, carriers are continuing with blank sailings to balance the demand and supply of space. FAK space are extremely tight, advance bookings of 3-4 weeks is recommended especially for big lot shipments. Overall equipment situation are rather stable except for 20GP shortage observed especially from North China.

Source: Ocean Freight Market Update (June 2023), DHL Global Forwarding

‍Why Blank Sailings Might Continue 

1. The impending dissolution of the 2M alliance, set for 2025, will likely intensify the competition. For instance, MSC has already announced a new Asia-Mediterranean service without Maersk.

2. Amidst an already heightened influx of deliveries, the growing demand for vessels fuelled by green methanol will increase supply. Leading carriers such as CMA-CGM, Hapag-Lloyd, and COSCO have recently placed orders for these eco-friendly vessels. The larger fleet size poses an additional challenge in achieving market equilibrium, potentially prompting carriers to implement more blank sailings as a response.

3. Earlier this year, it was expected that proactive steps like consolidation and effective alliances between ocean carriers would help deal with the supply-demand gap and further help in stabilising the dropping freight rates. However, as carriers failed to manage capacity to stabilize the freight rates, suffering heavy losses, things may have gotten out of control for them. To fix this issue, many carriers may continue to blank their sails.

Here's a list of a few carriers and their cancelled voyages for weeks 24-26.

Carrier Week Service/Vessel Voyage Number Notes
MSC 24 Jaguar QJ324N --
MSC 25 Maple San Francisca UM325N Vessel will slide one week
Maersk 24 TP2/ MDV Apollo 324N Cargo will be accepted on TP6 MSC Melatilde 324N or TP8 Maersk Shams 325N
Maersk 25 TP6/ MDV PSW2 325N Cargo will be accepted on the following TP6 vessel or connect to TP2 326N
OOCL 25 Antwerp Bridge (North Bound) 220N The NZS service will slide a week for schedule recovery
OOCL 26 Kota Lestari (North Bound) 229N The NZS service will slide a week for schedule recovery

How to Mitigate the Effects of Blank Sailing

While blank sailing remains a complex challenge, a proactive and agile approach will empower businesses to minimise the negative impacts and maintain resilient supply chains. For instance:

  • Getting weekly reports of blank sailings across carriers to know what’s happening and responding swiftly to changes.
  • Evaluating different shipping routes and considering transhipment options can help navigate around congested ports or regions experiencing frequent blank sailings.
  • Implementing robust supply chain management systems and technologies is vital. Leveraging real-time tracking and visibility tools can enhance transparency and enable better decision-making in response to blank sailing events.
  • Utilising predictive analytics can also assist in forecasting potential blank sailing scenarios and developing proactive mitigation strategies.

Conclusion

Staying proactive and well-informed about blank sailing situations in ocean freight is crucial. By actively monitoring port skips, rotation changes, and schedule adjustments, you can understand delays better and devise effective mitigation plans. Keep abreast of the latest information to ensure smooth and efficient operations in the face of these challenges.

Feel free to contact us to mitigate the risks associated with blank sailings and gain complete real-time visibility into your ocean freight movement. Our team of global supply chain experts is eager to understand your current challenges and guide you through the next steps.

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