Container freight rates holding up as blank sailings hit 435

The container carriers have blanked a total of 435 sailings on various deep-sea trades, equaling a demand decline of 7 million TEU in 2020 caused by the COVID-19 pandemic’s impact on global economies.

The figures were revealed by Danish consultancy Sea-Intelligence, which said the push has served as a strong underpinning for the freight rates though.

The blanking of sailings has already had a major effect on global ports, especially those on the U.S. West Coast. The drop in container volumes is estimated to have reached a 13 percent accumulated, further increasing from the gap greater by the China-Us trade war.

The consultancy said that over the past 6 weeks, the CCFI contract rate index was 11% higher than at the same period last year – despite the drop in both demand and oil prices. The decline in the overall index since Chinese New Year can be shown to be in line with normal seasonality.

The approach to the blank sailings differs between alliances. The pattern is that 2M and THE Alliance announce blank sailings ranging quite far into the future – typically to the end of Q2 – and then supplement these with a few additional blank sailings tactically as the situation evolves.

Ocean Alliance, on the other hand, announces blank sailings for a shorter period into the future and has not yet announced much for the later period in Q2.

As an example on the Transpacific, the three alliances have each blanked some 17-24% in weeks 15-21. However, for weeks 22-27 2M and THE Alliance have blanked 19-21% whereas Ocean Alliance at this point has blanked only 6%, data from the consultancy shows.

Given how the pandemic is impacting the economy, Sea Intelligence expects more blank sailings to emerge from Ocean Alliance in Q2.

The containment measures across the globe have had a colossal impact on the global economy and the International Monetary Fund (IMF) has sounded the recession alarm saying the Great Lockdown is likely to be worse than the Great Depression.

Some recovery is expected in 2021, however, the demand growth is likely to be modest.