Bleak outlook for box trades as demand weakens prior to Golden Week

Source: The Loadstar
Date: 4th September 2023

Export bookings leading up to China’s Golden Week holiday, starting 29 September, are reported to be ‘disappointing’, and the outlook thereafter is especially bleak, obliging carriers to take radical blanking action.

As a consequence of the void sailings from China, Europe and the US, container terminals and North Europe’s feeder and barge operators can expect a very lean time ahead.

MSC said it was blanking no less than 11 sailings from Asia to North Europe and five Asia-Mediterranean voyages between weeks 37 and 42, due to an “anticipated slowdown in demand”.

The cancellations begin next week and include six consecutive weekly blanking of MSC’s Asia N Europe standalone Swan loop and the three of its Asia-Mediterranean standalone Dragon string.

MSC’s 2M alliance partner Maersk begins its Asia-Europe blanking programme in week 39, with the cancellation of its AE55 (MSC’s Griffin) loop, scheduled to sail from Shanghai on 30 September.

Maersk said it was “looking to balance the network in light of forecast reductions in demand and a reduced workforce to handle cargo operations”.

As it stands, the 2M’s final blank sailing from Asia to the Mediterranean will be the 15,500 teu Maersk Canyon in week 41 and for North Europe, the 23,756 teu MSC Ambra, deployed on the AE6/Lion loop scheduled to sail from Ningbo on 20 October.

Meanwhile, on the transpacific, carriers are being equally ruthless in their capacity management, even though the trade from Asia to the US appears to be somewhat more resilient than for Europe.

For instance, the 2M is taking out three head haul US west coast sailings during the Golden Week period and, for the US east coast, the 2M and VSA partner Zim will blank five voyages from Asia.

Unfortunately for Zim, the 2M blanking include the Israeli carrier’s newbuild LNG-powered 15,000 teu Zim Mount Everest, which is one of 10 sister ships ordered under long-term charter specifically to target the Asia-US east coast route.

The two biggest trade lanes are not alone in seeing a significant ramping-up of carrier blanking, in fact virtually all services are experiencing the cancellation of outward loops from China, as the lines endeavour to prevent further rate erosion from softening demand.

Indeed, the weekly Ningbo Containerized Freight Index (NCFI) commentary published today reports that, across 15 of its 21 monitored export routes, rates have fallen in the past week, which it attributes to “oversupply” and “sluggish demand”.

However, one bright spot for the shipping lines in the NCFI commentary is the booming trade with India and Pakistan, where it says demand “continued to rise” and that “space was tight” on some sailings.

As a consequence, rates from Ningbo to India and Pakistan spiked another 12% last week, the fifth consecutive weekly increase for that trade.

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