The Red Sea crisis and port congestion have put the shipping industry under the dual pressure of a surge in blank voyages and rising freight rates

2024-05-16 09:25

Traditionally, shipping companies have used blank sailings to manage supply and demand, but during the pandemic, shipping lines were forced to fly in the air due to a shortage of vessel capacity due to widespread port congestion.
       According to the Sea-Intelligence report, the current round of blank sailings is also due to a shortage of vessel capacity, as the idle rate of the container fleet in April was very low at 0.9%.
      "Through an analysis of actual capacity deployments in March and April 2024 and comparisons with the plans developed by shipping lines for the Asia-Europe and trans-Pacific routes in mid-February 2024," the analyst said. As shown in the figure below:

The proportion of capacity on the Asian-Nordic blank sailing almost doubled from March to April, rising from -12% in March to -21% in April. For the Asia-Mediterranean trade, the opposite is true, with the proportion of empty sailing capacity falling from -17% in March to -8% in April.

On the transpacific lane, the situation is more stable, with capacity to the US West Coast reduced by about -14% and capacity to the East Coast by -11% in March and April 2024.

Alan Murphy, CEO of Sea-Intelligence, noted: "This shows that the operating environment on the Asia-Europe route is more volatile than that of the transpacific route. ”

Alan Murphy said: "With almost no idle vessels and spot rates rising sharply in recent weeks, the Red Sea crisis has driven an increase in blank sailings. Congestion at major hub ports in Asia and Europe is worsening. As seen during the pandemic, port congestion can drain supply and lead to potential capacity shortages. ”

"Since the beginning of the Red Sea crisis, we've said: while there's enough capacity to move ships around Africa, there's not enough additional capacity to deal with other major disruptions," Murphy concluded. Therefore, port congestion must be controlled, otherwise spot rates may rise further rapidly. ”

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