- Freight rates have not collapsed as containerships continue to blank.
- Container lines have canceled 458 sailings since Chinese New Year.
- Global demand for many items other than essential household goods and medical supplies continued to dip.
Greg Miller, senior editor for freightwaves, reports that container shipping companies including Maersk Line, MSC and others continue to “blank” (cancel) transoceanic sailings to bring vessel capacity in line with pandemic-stricken cargo demand. As a result of this action, they’ve been able keep freight pricing from collapsing — so far.
More number of container lines cancelled
A lot of container lines have been cancelled in February and March due to the shutdown in Wuhan, China. Besides, the cancellations in April-June may be due to reducing import demand in Europe and the U.S.
- Container lines have cancelled 458 sailings since Chinese New Year.
- 89 cancellations were due to the Wuhan shutdown.
- 369 were due to demand fallout in the West. In the latter category, 83 sailings were canceled last week (through April 11).
- The week prior, there were 167 cancellations — twice as many.
According to Alan Murphy, CEO of Sea-Intelligence, canceled sailings imply a pandemic-induced demand decline of around 6.4 million twenty-foot equivalent units (TEU) so far.
If there were no further cancellations — which Murphy considers “quite unlikely” — this would equate to a full-year demand decline of 4%. Sea-Intelligence has previously estimated that cancellations will continue and full-year demand could ultimately fall by around 10%.
Stabilized Freight rates
The Freightos Baltic Daily Index tracks the spot cost to ship a forty-foot equivalent unit (FEU) container along various trade lanes.
- In the China-to-U.S. West Coast lane (SONAR: FBXD.CNAW), the rate was $1,577 per FEU on Tuesday.
- The rate has increased 2% over the first two weeks of April, is flat year-on-year,
- And is up 44% from two years ago.
Negative trend for carriers
The trend is not as positive for carriers in the China-to-U.S. East Coast lane (SONAR: FBXD.CNAE). The rate was $2,646 per FEU on Tuesday, down 6% since the beginning of April and down 4% year-on-year, but still up 24% from two years ago.
While, taking a look at the global composite (SONAR: FBXD.GLBL), the rate was $1,461 per FEU on Tuesday, up 1% since April 1, 6% year-on-year and 34% from two years ago.
According to Eytan Buchman, chief marketing officer of Freightos, “Global demand for many items other than essential household goods and medical supplies continued to dip, [and] larger multinational importers appear to be anticipating this to an even stronger degree, reducing orders or slowing imports.“
“To keep ocean freight rates from collapsing, ocean carriers have blanked a record number of sailings. The cancellations appear to have kept rates steady this week,” Buchman said.
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