East-West Trade Faces 6% Sailing Cancellations Amid Freight Rate Surge

55

Cancellation Rates and Scheduled Sailings

Across the major East-West headhaul trades: Transpacific, Transatlantic and Asia-North Europe & Med, 39 cancelled sailings have been announced between week 22 (27 May-2 Jun) and week 26 (24 Jun-30 Jun), out of a total of 651 scheduled sailings, representing 6% cancellation rate.

During this period, 44% of the blank sailings will occur on the Transpacific Eastbound, 36% on the Asia-North Europe and Med and 20% on the Transatlantic Westbound trade.

Alliance and Non-Alliance Cancellations

Over the next five weeks, 2M have announced 9 cancellations, followed by THE Alliance and OCEAN Alliance with 7 cancellations each. During the same period, 16 blank sailings have been implemented by non-Alliance services.

As can be seen in the chart above, we are looking at a slight improvement in carriers’ service reliability: on average 94% of the ships are expected to sail as scheduled, over the next five weeks.

On the ocean freight side, Drewry’s Composite Freight Index surged by 16% WoW to $4,072. This week, rates on Asia-Europe and Med routes were up by 17%, Transpacific by 15%, and Transatlantic by a modest 1% WoW.

Drivers of Rate Increases & Short-Term Outlook

The recent 49% surge in rates over the last three weeks is likely driven by port congestion in Asia, increased US import demand, and ongoing Middle East tensions. The container market is further strained by cargo owners’ concerns about potential North American labour strikes and disruptions in the Red Sea.

While short-term factors like port congestion in Asia and container shortages are the primary verified causes of the current rate hikes, carriers seem to anticipate this trend will persist with the rate increases announced for June, despite so far, no sign of a drop in capacity year-over-year in Asia major routes apart from the decline seen in Asia-North Europe.

Did you subscribe to our daily Newsletter?

It’s Free! Click here to Subscribe

Source: Drewry