Ocean carriers aggressive blanking strategies - Project44

Project44 known to be the creator of the world’s leading Advanced Visibility Platform™ for shippers and logistics service providers, recently reported that Ocean carriers are resorting to more aggressive blanking strategies to manage a dip in demand which is stated on their June's edition report "Ocean Carrier Report".

The said report states that 2M alliance of Maersk and MSC was the most aggressive, cutting back its services by as much as 71% in the second week in May. It also suggested “other tactics”, including more slow-steaming, would be employed by shipping lines to underpin rates and mitigate the impact of soaring bunker costs.

“With ocean freight spot rates in freefall and demand for containers down year on year, carriers have moved to protect profitability,” said p44.

The report also shows the increasing trend of carriers to divert vessels to “more profitable” routes, leaving some network trades as “‘ghost” services –without a ship assigned.

“Vessel nominal teu capacity data shows there’s more tonnage available, but carriers appear to be putting the brakes on softening spot rates by tightening up supply on certain routes while switching tonnage to the most profitable trade lanes,” said Josh Brazil, VP of supply chain insights at p44.

On the other hand, due to an easing of port congestion, and transhipment rollovers are decreasing which leads to cargo lead times improvement across three main trade lanes – Asia-Europe, transpacific and the transatlantic.

In addition, p44 data indicates blank sailings are set to decline in the coming weeks as carriers gear up in anticipation of the seasonal peak season.

It said its data shows Evergreen will have the lowest average percentage of blank sailings in the build-up to the peak season with, for example, the Taiwanese carrier showing just 12% of its advertised sailings will be voided next week.

The ocean carrier report identifies the Ocean Alliance as “the most aggressive” of the vessel-sharing consortia in “pushing for market share”, by keeping blank sailings below the industry average.

It is possible though, that if inflationary fears and the tightening of monetary policy dampen global demand, the OA may also be obliged to row back on market share grab.

Referring to the publication of Container Trade Statistics’ 4.2% negative growth for global demand in April, p44 said the demand slump shown by the data was “hovering at similar levels to April 2019, before the dramatic collapse associated with the pandemic”.