Blank Sailings Causing High Rates and Space Crunch on Trans-Pacific Eastbound

Increases in blank sailings in response to low volume levels is causing rate hikes and space constraints with many of the big carriers.

Earlier this week, The Alliance (Hapag Lloyd, ONE, YML and HMM) along with the 2M Alliance (Maersk Line and MSC) announced that about 75 sailings will be canceled through September in a bid to match capacity with weak anticipated volume levels. The Ocean Alliance (Cosco, OOCL, CMA APL and EMC) is expected to follow suit although no announcement has being made yet.

The withdrawal of such a significant amount of capacity has kept rates at levels not seen in quite awhile.

Because of the need for space, many carriers have started using different tactics such as offering “Expedited Service.” This type of service is essentially “space protection” offered by the carrier. SM Line Prime Service, Matson and APL Double Eagle Service are a few carriers using this strategy. Basically, the carrier will offer an up charge in order to protect the space on the intended vessel. In some cases, they offer a faster transit time, but in many cases it’s simply a way to charge a premium in return for guaranteed space. Another strategy used by carriers is to offer “extra Loaders.” This is a way to clear backlog without fully restoring scheduled sailings.

This situation is expected to continue for the next few months. Worldwide Logistics Group is working to mitigate the effect of these rate actions as much as possible. If the market remains strong and carriers continue to implement blank sailings, rates will remain strong and capacity will be strained. Customers are encouraged to place bookings at least two or more weeks in advance. This will allow us to better forecast space requirements and secure as many options as possible for timely and cost effective movement of cargo.

Please contact your Worldwide Logistics Group representative for more information.