Market Updates

Transpacific Ocean Freight & Blank Sailings Update | Week 17

Blank sailings continue amid uncertainty

As the COVID-19 pandemic ensues, the trends we reported in our last update continue. Carriers are cancelling an increasing number of sailings on the Transpacific trade lanes, schedule reliability remains low, and we're seeing equipment shortages pop up across the country. Several states have announced preliminary reopening plans, but we predict this process will be slow, with a rebound occurring in 2021.

Despite all of this change, we have to applaud the resiliency of the supply chain industry and the many people that have come together to fight the pandemic. We must remain positive and focused on keeping the world moving forward through these challenges. Thank you to all the front line workers who are keeping shelves stocked and essential supplies moving.


Transpacific Ocean Freight Market Update

Void sailings continue to tighten capacity, rates remain stable

The battle with COVID-19 continues across the globe and the trends from our last update have persisted in April.

Carriers are blanking sailings at an increasing pace to match supply with lowered demand in an effort to maintain rates and avoid operational losses. This is taking capacity out of the market and leading to fully booked vessels. Priority is given to medical shipments and essential goods, while lower-paying and non-essential cargoes can be subject to roll. 

 

 

In a recent interview with Splash247, Lars Jensen, CEO of SeaIntelligence Consulting, predicted that ocean carriers "will experience a 10% downturn [in volume] in 2020." If we start to see rate levels slide, he explained, the impact of losses could be much greater.

"That's why you've seen carriers really hold the line this time around," he said, "We have, up until now, not seen rates be under pressure. They have fallen somewhat, but not out of line with what we typically see as a seasonal decline after Chinese New Year."

In terms of schedule reliability, we previously reported that schedule reliability had plunged to 65% in February according to maritime analysts. This trend is expected to continue as major lines keep changing schedules amid the COVID-19 demand crisis. In February, the average delay for late vessel arrivals rose to five days according to FreightWaves, the highest since the U.S. West Coast labor dispute in 2015.

 

Supply chain impacts at-a-glance

On the Asia Pacific to North America trade, demand is weak due to major U.S. retailers closing stores, leading to the rise in blank sailings. Moving from North America to Asia Pacific, capacity is subsequently tight due to the cancelled sailings, so some bookings may get rolled.

The Latin America trade is also being impacted by COVID-19. Blank sailings, equipment shortages, and administrative delays on the carrier side due to the virus are to be expected.

Another area hit especially hard is India. Due to the lock down happening in the country, Ocean Alliance has announced back-to-back blank sailings. These will occur on the Indamex / IEX service from the U.S. East Coast (USEC) to India Subcontinent / Middle East from Weeks 17 through 20. The service is expected to resume on May 7 but the situation remains fluid.

"We’ve all seen numerous blank sailings for exports, but this is by far the most back-to-back voided sailings I’ve seen any carrier announce so far," said Susan Chen, UWL Export Pricing Manager. "There will be challenges ahead, so plan accordingly and forecast as much as possible."

For ocean drayage, border control measures and restrictions from COVID-19 will lead to longer wait times for trucks. Port congestion will become a growing problem as import containers pile up, transshipments occur more frequently, and equipment becomes tied up as shippers look for places to store their inventory. 

 

Q2 Transpacific Trade Blank Sailings: By the Numbers

Note: In this article, we are focused on cancelled transpacific sailings from East Asia to all USA and Canada destinations.

Go to latest update >>

What is a blank sailing? Learn more here >>

Another great resource for updates on the latest blank sailings is Container-News.com. This site features a Blank Sailing News section that highlights specific details of blank sailings announced across the globe all in one place. Check it out here.

 

Equipment Availability

Plan ahead to secure equipment in a tight market

As we mentioned in a previous update, USA Exports: Equipment availability impacts from COVID-19, we continue to see equipment shortages occurring at most major inland points. Blank sailings from China to Europe that occurred when the coronavirus outbreak first began have left Europe and the United States short on containers.

DHL reported that some steamship lines, such as MSC, have begun deploying "megamax ships" capable of carrying 19,000+ TEUs to the U.S. to continue their regular Transpacific services while using the additional capacity to reposition empty equipment where needed. 

We know many importers are struggling to accept incoming containers due to changes in demand from the pandemic. If you are in need of used containers or on-site storage space, we are well equipped to support you, especially in key cities including Cincinnati, Cleveland, Columbus, Detroit, Indianapolis, Louisville, and St. Louis. Many of our facilities are lighted, fenced, on cement and monitored with 24/7 video surveillance. Please reach out if you need assistance. 

Check out this article for a detailed list of where to expect shortages and tips to secure equipment in a tight market.

 

So what is a shipper to do?

Here's a quick reminder of some simple things you can do to successfully navigate these seas of change:

  1. Plan ahead. Book your shipments well in advance (6-8 weeks if possible). This will help you secure equipment when it is scarce and allows ample time for planning. 

  2. Use online tools when possible. Ports and carriers in many cases are not accepting paper documents, including hazardous declarations. Submit your documents electronically, make payments electronically rather than by check, and to use online tools whenever possible.

  3. Forecast, forecast, forecast. Proactively forecast the shipments you expect to move in coming weeks. Download UWL's Proactive Equipment Forecast Planner and send it to your LC – or directly to uwlquotes@shipuwl.com – and we will work proactively with the ocean carriers to support your bookings.

  4. Stay informed. We'll continue to share the latest news, helpful resources, and keep you informed of new market developments. Sign up for our email newsletter if you'd like to receive these updates directly in your inbox. 
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In the face of the pandemic, it's important to remain hopeful. Times are changing and the challenges that lay ahead may be immense, but we will learn, we will overcome them, and we will get through this emerging stronger than we were before.

Take a deep breath. Exhale. You've got this. We hope you are staying safe and we wish you all the best.

For a bit of good news, check out these stories featuring some of our clients who are bringing PPE to front line workers

If you have any questions or if there is anything we can help you with, please reach out.

 

Additional Resources

For more information, check out some of our other resources below:

 

Global COVID-19 Cases Map

Credit: Johns Hopkins Center for Systems Science and Engineering

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