Freight carriers aim to manage supply-demand balance by blanking more sailings
Global container freight index is currently at its lowest since late 2020, after having slumped dramatically by 90% from the all-time high hit back in September 2021. However, it is noteworthy to mention that current rates for the global index are still at least 50% higher than the pre-pandemic levels in 2019 and before, according to Freightos.
Lack of demand surge ahead of CNY holiday
Contrary to previous years, there was not a significant overall increase in demand before the festive season, during which most carriers typically take advantage of this demand surge and increase freight rates from Asia. As a matter of fact, Drewry’s estimates showed that transpacific rates to the West Coast were more than 80% lower from a year ago while rates to the East Coast were 75% lower than the same week in 2022.
Amid an absence of the usual pre-holiday rush, the short-term outlook began to darken, with most carriers forecasting a continued easing of demand following the holiday.
Carriers increase capacity management efforts
As the short-term outlook turns bleaker, capacity management remains a top priority for ocean carriers. The recent reports by Freightos indicate that carriers are planning to blank more sailings, effectively removing nearly half of scheduled transpacific capacity over the CNY holiday.
Drewry’s weekly analysis showed that 131 canceled sailings have been announced between weeks 5 and 9 across the major trades, out of a total of 693 scheduled sailings. During this period stretching from January 30 to March 5, transpacific eastbound represents 66% of the blank sailings.
Will blanking help rates prop up in short-term?
Over the short-term, carriers are unlikely to abandon their strategy as freight demand looks set to cool down even further. With more carriers increasing attempts at managing capacity to support freight rates, analysts think that there might be a chance that transpacific freight rates will stabilize. Some analysts even point out that if blanked sailing campaigns succeed in matching supply with demand, rates could even edge up over the coming weeks.
Check out the latest freight rates among eight major routes from here.
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