BLOG. Shipping Volumes
July 21, 2020
Low demand and capacity withdrawal to persist for container shipping
Lee Hong Liang | Jun 30, 2020
Container shipping is expected to see current low demand levels persisting, consequently leading to high levels of capacity withdrawals, according to analyst Sea-Intelligence.
With the IMF recently updating its outlook for the global economy revising a negative 3% recession for 2020 to a deeper minus 4%, demand for global container shipping is anticipated to take a hit.
In terms of world trade, a previous projection of negative 11% for 2020 is now revised to negative 11.9%, with the 2021 rebound revised down from 8.4% to 8%.
The Euro area saw GDP growth projections drop from an already low of negative 7.5% to negative 10.2%.
“This is especially concerning since the region will drive demand to fill the newest generation of ultra-large container vessels,” said Alan Murphy, ceo of Sea-Intelligence.
The IMF projection – if it turns out to be correct – is telling us that the current low demand levels are likely to persist for a while. Consequently, the high levels of capacity withdrawals are also likely to persist. This is a view that is also backed up by the actual capacity withdrawals thus far seen in Q3,” Murphy said.
The number of blank sailings announced for Q3 increased from just 13 in week 20 to 76 in week 25 and then to 82 in week 26 (current week). However, this development is not uniform across the major East/West trades.
“On the Asia-North America West Coast trade lane, there has been a sharp decrease in blank sailings as blank sailings are getting reinstated. While this is not due to a structural improvement on the trade, it is more so as a result of either carriers pulling out too much capacity from the trade in the first instance, or US importers fulfilling short term needs by using a faster US West Coast service instead of a US East Coast service with considerably longer transit times,” Murphy explained.
Copyright © 2020. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited.
Carriers make marginal increase in Q3 blank sailings, spot rates strengthening
Lee Hong Liang | Jun 17, 2020
Container shipping has announced marginal capacity reductions in the third quarter on the transpacific and Asia-Europe lanes amid continuing strengthening of spot rates, according to analyst Sea-Intelligence.
“As we start week 25 (this week), a little more than 4m teu of capacity has been blanked, equivalent to 3.2 times the 2020 Chinese New Year blank sailings,” said Alan Murphy, ceo of Sea-Intelligence.
Murphy noted that carriers have announced “only” 53,500 teu of blank sailings in week 24, with thje total blank sailings crossing the 4m teu mark.
Related: Main container lines face $23bn loss in 2020 under ‘worst case’ scenario
Ocean Alliance have so far announced capacity reductions of 1% to 4% on Asia-Europe compared to 20% to 25% for 2M and THE Alliance, while they have announced 2% to 5% on transpacific compared to 3% to 10% for 2M and 9% to 15% for THE Alliance.
“The freight rates are also strengthening further on the transpacific and Asia-Europe trades, with Asia-US West Coast increasing by 102% and Asia-US East Coast by 22% following the post-Chinese New Year bottoming out,” Murphy said.
“Freight rates on Asia-Europe have also increased following the post-Chinese New Year decline, in line with Asia-US East Coast, with Asia-North Europe increasing by 21% and Asia-Mediterranean by 13%,” he added.
Copyright © 2020. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited.