Ocean freight rates, rollovers and blanked sailings; the saga continues

Shippers from Asia to Europe continue to see increases in container spot rates, as cargo-rolling become ever more commonplace and carriers begin to cancel sailings in an effort to restore schedule reliability.

Space on vessels from Asia is effectively ‘sold out’ for May and June, with a succession of GRIs being introduced by shipping lines, and sticking, as shippers without access to contracts like ours, struggle to find space.

With many businesses striving to replenish inventory for the summer season, rates are spiking, driven by desperate shippers willing and having to pay over $14,000 for a 40ft. And even with shippers accepting such rate levels, there is no guarantee they will get empty equipment released by the shipping lines at origin or their booking guaranteed on the intended vessel.

It is anticipated that space will get tighter still, with THE Alliance confirming that it will cancel three sailings departing Asia at the end of May and beginning of June, “due to the unfortunate schedule delays”.

The members of the OCEAN Alliance and the 2M Vessel Sharing Agreements have not yet announced blank sailings, but their schedules are equally disrupted by delays and the impact of the Suez situation and general conditions created by COVID-19.

There are currently 115 Asia-Europe sailings scheduled for May, with five sailings blanked, while in June there are 111 sailings scheduled and so far only one has been announced as blanked, although this is very likely to increase.

The number of days between two consecutive sailings of some ‘weekly’ Asia – Europe loops now varies between 4 and 11 days.

Service delays continue at almost every port and have been lengthening in recent weeks, with arrival and departure data showing vessels arriving at Southampton around 10 days late in February and between seven and 10 days late at Hamburg in March.

The surprise upswing in global shipping demand that began in the second half of 2020 and has kept building in 2021 has overwhelmed the global container shipping system and handed the shipping lines total pricing power control. A seller’s market.

There is no sign of the pressure letting up anytime soon and we are facing the need to deal with the pressures of huge demand conditions daily while planning for operations once we get through this period. This is without the increased clamour and pressure that will result during the traditional peak season from July onwards.

It is beyond difficult to book slots on vessels from many origins and in some there are not enough empty containers, while congestion ties up capacity.

Maersk, expects “this exceptional market situation” to last until the end of 2021, with elevated spot rates, port congestion, and container scarcity.

We would like to share Maersk’s belief that the situation will alleviate this year, but demand for goods remains high, even as consumers prepare to spend more on entertainment and travel, so we believe that any end-year improvement will be temporary. In our opinion, it is more likely that there will be no significant improvement ahead of 2022’s Lunar New Year.

More than a year after the COVID-19 pandemic first triggered massive disruption in global production and transport, supply chains are still on a knife’s edge and the week-long blocking of the Suez Canal illustrated just how fragile they are, effectively cancelling the shipping lines’ efforts to recover schedules. even with the pandemic declining in many parts of the world.

Metro negotiate rate and volume agreements with a wide range of carriers across all three alliances, which means we can access the widest pool of equipment and offer shippers the biggest range of service offerings, port-pairings and rates.

Our fixed validity contracts provide supply chain security and peace of mind, but the best contracts cannot magic empty equipment, which is why we request a minimum of four weeks visibility and booking window, to secure space on the vessel and get the right equipment positioned.

Please contact Elliot Carlile or Grant Liddell to learn how we can support your supply chains, even in the most challenging market conditions.