Falling container spot rates(SCFI) and blank sailing

1.     What is a blank sailing?

 A blank sailing (a void sailing) is a sailing that has been canceled by the carrier. A blank sailing could mean a vessel is skipping one port, or that the entire string is canceled. A string is a set of ports served weekly by a carrier. For example, one string might be: Shanghai > Ningbo > Los Angeles > Oakland > Shanghai. The string moves in a circular direction but always along the same schedule of ports with a fixed departure day of the week set for each port

(Source : Flexport)

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2.     Why do blank sailings happen?

 

1) When demand for space on vessels is low. Carriers balance available container supply with projected demand.

2) When carriers are changing the number of strings per week. Blank sailings will occur during that transition time. Strings are also rescheduled when new ocean alliances are formed.

(Source : Flexport)

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3. Trend of Blank Sailing in Container Main Route (East-West)

 Let's take a look at the latest blank sailing trends for the four major routes. Until January 21year, there was almost no blank sailing on all four routes, with 0~2 times. This is proof that there was no need for blank sailing, of course, because sea freight rates were very high in this area.

 

 The Asia-WCNA route peaked in December 2021 (38 flights) and decreased slightly after peaking in January-February 22 (70-69 flights). On the other three major routes, blank sailing has been increasing since January 22year. In other words, shipping companies are regulating supply through fleet control in order to defend against a drop in freight rates due to a decrease in demand. But, as you know, nonetheless, SCFI's rates have been falling for the 19th straight week now.

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4. Blank Sailing by Alliance (WCNA route)

 Let's take a look at the Blank Sailing trend by Alliance on major WCNA routes. While 2M has relatively few blank sailing times, Ocean Alliance has increased rapidly since August 22nd. On the contrary, THE Alliance started Blank Sailing with a high proportion in February and March of 22, and the proportion has decreased recently.

 

Based on this, each shipping company's response strategy is inferred.

2M Alliance is improving service reliability by maintaining realibility despite the drop in freight rates.

Ocean Alliance has stood up to maintain service reliability, but it has not been able to withstand the sharp drop in freight rates and has been taking a step back by implementing high blank sailing for the last two months (August and September).

THE Alliance implemented a high level of blank sailing in the early stage (February to March) to defend the profitability of shipping companies, but the scope seems to have decreased as it could not withstand cost problems such as fixed costs.

 

In other words, 2M's No. 1 strategy, which maintains credibility with shipping companies and shippers despite declining profitability, stands out.

 

thank you