With just over a month before China’s national Golden Week holiday – after which the slack season begins in earnest – ocean carriers are belatedly ramping-up their blanking programmes.
For example, MSC advised today that, “in line with lower demand”, it would again be suspending its standalone Asia-North Europe Swan loop, this time for six consecutive weeks, from week 37 through to week 42, in mid-October.
The carrier said it would also cancel three successive sailings of its Asia-Mediterranean Dragon service, weeks 39, 40 and 41.
Just last week, MSC announced rotation changes to the Swan schedule, which included an extra call at Felixstowe in North Europe, but also saw the removal of some Asian ports from the rotation.
The week 36 sailing of the revised Swan service is still scheduled to take place from Ningbo, China on 7 September with the 4,931 teu MSC Mirella.
The Swan loop was relaunched in June as a standalone service outside the 2M Alliance partnership with Maersk. However, MSC has struggled to justify the extra capacity and has downgraded the size of the vessels deployed, from circa-15,000 teu ships to maximum 6,700 teu.
“Weak cargo demand in July and August has forced MSC to deploy smaller vessels and to skip sailings,” said consultant Alphaliner. “The last three sailings of this month, with the 14,036 teu MSC Deila were all voided and the vessel was re-deployed this week on the Far East-Middle East New Falcon loop.”
Perhaps more of a surprise is MSC’s decision to blank three consecutive sailings of its standalone Asia-Mediterranean Dragon loop due to soft demand, given the hitherto resilience of the trade.
It appears that, after weeks of generating a more robust booking position, and consequential higher spot rates than Asia to North Europe, an injection of extra capacity on the route has had a negative impact.
Indeed, the Ningbo Containerized Freight Index (NCFI) commentary this week said carriers for both North Europe and the Mediterranean “continued to undersell their space to canvass more orders”, resulting in a fall in spot rates for both trades.
Meanwhile, consultant Sea-Intelligence believes carriers have been too slow to adjust their capacity ahead of China’s national holiday. CEO Alan Murphy said: “With Golden Week only five weeks away, there is not much time left if carriers want to announce more blank sailings.”
According to Sea-Intelligence data, and taking the transpacific as an example, the combined scheduled capacity reductions on the tradelane for the Golden Week period (Golden Week plus the following three weeks) is currently just 3%, compared with an average of 10% for the years between 2017 and 2019.
“Additionally, with tepid peak season demand, it could be argued that the blank sailings needed to keep the market stable would have to exceed what was done in 2017 to 2019, placing further pressure on the blank sailing strategy for carriers in October,” said Mr Murphy.