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Golden Week blanked sailings 'a sledgehammer to crack a nut' tactic   12/09/2023

Container Port in Hong Kong

October sailings from Asia to Europe are being cut to below-demand levels in a final attempt by carriers to push up rates before the start of the slack season.

Multiple blank sailings have been announced by members of the three alliances for both North Europe and the Mediterranean around the Chinese Golden Week holiday in the first week of October, and through to the end of the month.

The latest customer advisory from THE Alliance lead line Hapag-Lloyd said the cancelled sailings, which include the FE2, FE3 and FE4 loops to North Europe in week 40 that deploy 24,000 teu vessels, were “a consequence of the forecasted reductions in demand”.

And for the Asia-Mediterranean trade, THEA partners have followed the lead of the 2M, and MSC’s standalone services, by radically cutting capacity on the route between weeks 40 and 43.

It is not clear at present whether THEA member HMM will blank any sailings of its Asia, India to Mediterranean standalone loop that launched in August.

Rates on the hitherto robust Asia-Med trade have slid in recent weeks, as a result of a significant injection of capacity by carriers, which, combined with weakening demand, has driven spot prices below $1,000 per teu.

The aggressive blankings around the Golden Week holiday by all three alliances could see shippers and forwarders struggling to find space for exports from China to Europe next month.

“It’s a bit of a ‘sledgehammer to crack a nut’ tactic,” a carrier contact admitted to The Loadstar. “There’s no real science in this, other than we know that if shippers start to scramble for space, and cargo gets rolled, then rates go up.”

Indeed, carriers have been forced to take action after Asia-North Europe 1 August GRIs were eroded and average rate spot indices started recording week-on-week 10% declines.

Moreover, ‘market’ rates have been falling dramatically, with some of The Loadstar’s NVOCC and shipper contacts receiving offers direct from carriers for Chinese main ports to UK ports at below $1,000 per 40ft, including bunker surcharge.

Notwithstanding the impact of the mass blanking of sailings in October, there will also be the knock-on effect of a dearth of export loaders from North Europe a month later.

“It looks like it could be a nightmare to find space out of Europe during November and December,” a forwarding contact told The Loadstar.

“Some of our clients require a regular flow of their products, and we will be lucky to find space at any price,” he added.

Carriers will, of course, be looking to raise rates on backhaul trades as prices on North Europe-Asia are also touching new lows. For example, Xeneta’s XSI North Europe to Asia component fell another 5% last week, to $373 per 40ft, but ‘market’ rates are said to be as low as $250.

Meanwhile, carriers know that unless they ‘stop the rot’ now, and start to push rates back up, the next opportunity to significantly raise prices will be in the build-up to the Chinese New Year, next February.

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