Lines seize Golden Week opportunity for blank sailings

China’s Golden Week of public holidays runs 1-7 October and comes at an odd time for the container sector, as congestion-induced overheating cools off in the market and this year’s peak season falls flat.

Alan Murphy, CEO, Sea-Intelligence noted in a recent update that container lines have spent much of the past two years struggling to meet demand, blanking sailings as vessels were unable to keep schedules due to delays at congested ports. Lines now find themselves using blank sailings to cut vessel supply to maintain freight rates.

“In the past few months… demand growth has stalled, vessels are not fully utilised, and freight rates have been dropping consistently and considerably. This is where the carriers would naturally resort to tactical blank sailings, to the stem the bleeding in freight rates,” said Murphy, and Golden Week presents an opportunity to blank more sailings without angering cargo interests.

Sea-Intelligence data puts Transpacific capacity reduction at 22%-28% in the weeks after golden week, higher than the 15%-17% reductions seen in pre-pandemic 2019 and 9%-11% in 2014-2018.

“We see higher numbers on Asia-North Europe as well, with the peak capacity reduction following Golden Week at a little under 20%, which, while in line with 2019, is higher than the 2014-2018 average,” said Murphy.

Xeneta’s weekly container analysis also looked at blank sailings, specifically on the Far East to US West Coast.

“Despite this being the traditional peak season of the year when blank sailings usually fall as volumes rise, the past few weeks have seen the highest levels of blanked capacity since January and early February as this year’s peak season has failed to materialise,” said Xeneta.

The increase in blanked sailings is a response to falling spot rates, down 46.3% over the past 12 weeks, said Xeneta. Carriers blanked some 1.5m teu of capacity over the same period.

Xeneta pegged capacity on the trade over the past four weeks at 13% lower than the same period in 2021, and 5.4% or 600,000 teu lower for the year to date compared with last year.

“Compared to this significant drop in capacity, the fall in demand has been more pronounced. Over the first seven months of the year, the number of containers from the Far East to the US West Coast has fallen by just under 700,000 teu (Source: CTS),” said Xeneta.

One upside to fewer ships calling the US West Cost is an increase in reliability. One in four ships are now arriving on time on the West Coast now, compared to one in six at the same point last year.

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