Global News Forwarders warn of substantial Q4 rise in Asia-Europe blank sailings

Global forwarders are warning of a significant increase in blank sailings on the Asia to North Europe and Mediterranean trade lanes through the fourth quarter as capacity outstrips demand and new megaships pile more pressure on the heavily oversupplied trade lanes.

So far there is little sign of urgency among carriers to withdraw greater amounts of capacity. Announcements from carriers show that on Asia-North Europe, 2.7% of available capacity will be blanked in September and 6.2% in October, while on Asia-Mediterranean routes 5.5% is set to be cut in September and 5.8% in October, according to Sea-Intelligence Maritime Analysis.

But Markus Panhauser, senior vice president for ocean freight/Europe at DHL Global Forwarding, said they were preparing for a ramp-up in void sailings through the last quarter of the year.

“We expect a certain rate disruption after Golden Week [the Chinese holiday in the first week of October] or connected strong countermeasures with massive blankings,” Panhauser told the Journal of Commerce Thursday.

However, he said carriers were reluctant to provide early blanking information to the market.
“We are asking for their blanking plans, but they are not willing to share too much information,” he said. “It is all done on short notice with the alliances.”

The global head of sea freight at another Europe-based forwarder agreed that the pace of blank sailings will accelerate.

“We definitely estimate that the alliances will start an extensive blank sailing program soon with the aim to stop the downtrend of rate level and stabilize the market,” the source, who did not want to be identified, said. He added that the offered capacity in the coming weeks was being driven up by the delivery of new megaships and steadily improving schedule reliability. Supply outpacing demand The global order book capacity is close to 30% of the active fleet at more than 7 million TEUs, with Drewry estimating 2.5 million TEUs of capacity will be delivered by the end of this year and three million TEUs in 2024.

Hapag-Lloyd CEO Rolf Habben Jansen said in a first-half earnings call with analysts last week that he expected supply to outpace demand for the next 18 months. Analysts predict global demand this year will grow 2% while supply will increase 4%; in 2024, they see capacity rising 7% against 3% growth in demand.

At least 65% of the ordered capacity consists of vessels with a capacity greater than 15,000 TEUs that will mostly be deployed on the Asia-Europe trade lanes. For instance, OOCL in June took delivery of the third of a 12-ship order of 24,188-TEU vessels, while the first of six 24,136-TEU ships have been delivered to Ocean Network Express and Hapag-Lloyd has started to take delivery of a 12-ship order for 23,500-TEU vessels.

The 2M Alliance of Maersk and Mediterranean Shipping Co. added two megaships to the AE6/Lion service from Asia to North Europe in early June. The upsizing of capacity is part of a program to reduce speed on all eight of the alliance’s Asia-Europe loops to lower bunker costs and emissions, improve reliability and absorb extra “megamax” tonnage, according to Alphaliner.

Using 13 MSC-operated ships ranging from 19,400 to 24,300 TEUs in capacity, the round-trip service will be extended by two weeks to 13 weeks.

“I can confirm that the offered capacity in the coming weeks is considerably higher than a year ago,” the European forwarder told the Journal of Commerce. “It is mainly driven by the delivery of 23,000-plus-TEU new vessels and also improved schedule reliability.”

On Asia-North Europe routes, schedule reliability reached 70% in June compared with 29.8% in the same month last year, while Asia-Mediterranean on-time performance was 55.5%, up from 38.8%, according to data from Sea-Intelligence Maritime Analysis.

Despite the substantial capacity injection on Asia-Europe, Panhauser said load factors remained high on the westbound trade lanes.

“We even face [cargo] rollings due to the inconsistent space availability in certain loading ports,” he said. “Asia-Mediterranean is surprisingly well-utilized, and rates are holding up.”

Spot rates from North Asia to the UK increased 11% in the past week to $1,400 per FEU, while North Asia to the Mediterranean remained flat at $2,067/FEU, according to Platts, a sister company of the Journal of Commerce within S&P Global.