Cancelled Sailings and Rate Outlook: Weekly Update and Key Drivers

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  • Transpacific routes see the most cancellations at 59%.
  • North American rates face risks from labour talks and the election.
  • Rate volatility is expected from capacity and geopolitical factors.

Between week 45 (4 Nov-10 Nov) and week 49 (2 Dec-8 Dec), for the main East-West head haul trades Transpacific, Transatlantic and Asia-North Europe & Med, Total number of cancelled sailings – 68, taken from total scheduled sailings of 693; this is a cancellation rate of 10%, reports Drewry.

Alliance-Specific Cancellations

For this period, alliance-specific cancellations are as follows:

  1. OCEAN Alliance: 19 cancellations
  2. THE Alliance: 12 cancellations
  3. 2M Alliance: 9 cancellations Additionally, non-Alliance services have implemented 28 blank sailings. Despite this, schedule reliability remains relatively stable, with approximately 90% of ships expected to sail as planned over the next five weeks.

Rate Trends and Market Outlook

East-West trade lanes bounced back this week. For the 14 weeks in a row, Drewry’s WCI Composite Index rose 4% week over week to $3,213 per 40ft container. The rise majorly was due to an increase of 10 per cent in Asia–North Europe/Med rates. All other routes, namely the Transpacific and the Transatlantic, posted no change. Despite this pick-up, increases in cancelled sailings in the Asia-Europe and Mediterranean trades may add some uncertainty to this outlook. The carriers might face a difficult task in sustaining or raising rates without more adjustments in capacity management.

North American Factors Influencing Shipping Rates

In North America, the following two critical factors may come into play in the short term:

  1. ILA-USMX Contract Deadline: The January 15 contract deadline for the International Longshoremen’s Association and the United States Maritime Alliance raises the prospect of potential strikes at East Coast and Gulf ports.
  2. U.S. Presidential Election Outcome: The outcome of the U.S. presidential election may force shippers to adjust their inventory levels ahead in anticipation of possible tariff change, especially in the scenario of a Trump victory in which concerns over tariff hikes may arise.

It appears that the combined forces of capacity management and geopolitical uncertainties are going to bring volatile times ahead for shipping rates. Carriers will be called upon to navigate these challenges diligently to stabilize the rates amidst such erratic demands and potential supply chain disruptions.

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Source: Drewry