Drewry: Void Sailings for Nought or Not Enough?(marine crane manufacturer;offshore crane manufacturer)

- Nov 06, 2018-

However, voiding of sailings did not help push up rates, according to shipping consultancy Drewry, as figures for August on Asia-North Europe painted a gloomy picture.

“This hasn’t fed into higher rates, which have been on fairly steep decline the past two months, with the Shanghai to Rotterdam benchmark of Drewry’s World Container Index losing approximately USD 400 per 40ft container since the end of August,” Drewry commented.

The 2M carriers are reported to be planning to resume the AE2 Service in December ahead of the peak season.

“This lack of spot market traction may have been one of the deciding factors for 2M carriers Maersk Line and MSC to resurrect the AE2/Swan, but it is also possible that the partner carriers reckoned on the market being in a position to absorb the injection of capacity by the time of resumption,” the consultancy explained.

The move comes at a pivotal moment in the Asia-Europe calendar as many of next year’s annual shipper contracts are being negotiated in readiness for the start of the year.

“A big drop in spot rates now would weaken carriers’ hands and make it far harder to secure any improvement over the previous terms,” Drewry explained.

Aside from the potential negative sentiment and headlines it might stir up during contract negotiations, Drewry believes adding a service to the Asia-North Europe trade in December is actually quite a logical decision.

Over the past five years (2013-17) the months of December and January have been two of the busiest for westbound container flow.  Over that same period, December’s westbound volume has on average been around 150,000 TEU above that of November and higher still when looking at January’s tally.

Assuming that trend is maintained the reintroduction of the AE2/Swan should not adversely damage average ship utilization, although it could prevent load factors from rising.

“If demand fails to materialize as hoped, Asia-North Europe carriers will look to narrow the monthly supply-demand gap via void sailings, but the history of this year indicates that the success of this tactic is questionable,” the consultancy added.

Drewry has counted a total of 62 blanked Asia-North Europe voyages for the first ten months of the year, peaking just prior to or during Chinese New Year (February) and Golden Week (October). In the interim there was a minimum of one and maximum of five void sailings.

“Given the general weakness of spot rates in this trade for much of the year it could be argued that all of that capacity tinkering was for nought, in which case why bother. Alternatively, the tactic still has value it is just a case that lines simply weren’t bold enough and should have withdrawn more voyages.

“Much will depend on how strong demand is over the coming months as to how deep carriers go with further void sailings. History suggests that they won’t go far enough for fear of not utilising their most expensive ULCV assets, in which case spot rates will continue to be under pressure,” Drewry concluded.(marine crane manufacturer;offshore crane manufacturer)

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