For much of the last year, shippers have been complaining about delays, lack of availability and rising costs as volumes soared in container shipping. A new analysis of the schedules and markets by the logistic platform Project44 forecasts the problems that shippers have been experiencing will continue for the foreseeable future.
A Project44 analysis of the sailing schedules of various shipping lines indicates that cargo delays could last well into the summer. They found that carriers are continuing to cancelling sailings, an indication that under capacity will remain a challenge for shippers.
Blank sailings had risen dramatically a year ago as the major carriers sought to address low demand and overcapacity during the worldwide lockdowns in the spring and into the summer of 2020. However, as consumer demand picked up and container volumes rebounded, the carriers restored their schedules leaving ports to more often highlight the challenges of dealing with extra loaders added to the shipping schedules. Blank sailings had largely disappeared.
As the rebound in shipping volumes reached new highs early in 2021 carriers, however, found themselves contending with a growing number of impediments to schedule integrity. Port congestion was the primary cause of distorting sailing schedules as ships wait to unload. On the U.S. West Coast, for example, dwell times in April 2021, measured from vessel arrival until container gate-out, continued to be lasting over a week. Last week, the Port of Los Angeles reported that it was making significant progress reducing the number of vessels waiting at anchorage for terminal space, but forecast that volumes will remain strong into the summer before an anticipated increase as retailers increase shipments to build inventories for sales in the fall and leading up to the holidays in December.
While ports have begun to manage the surge in demand and claw down some of the backlogs from early in 2021, carriers also began to resume blank sailings in order to maintain schedules and get ships to where they were needed the most. In addition to backlogs, other issues have caused blank sailings such as a labour dispute at the port of Charleston in South Carolina that has caused some of the major carriers to skip scheduled calls.
“Not only do blank sailings reduce the number of containers that shippers want to ship out from the affected ports, but they also disproportionately affect lower-paying shippers, with carriers favouring cargo from higher-paying customers,” said Josh Brazil, VP Ocean Markets. “This dynamic could drive up shipping prices further, as competition heats up for limited preferential space on ships.”
With maxed-out vessels skipping more ports, Project44 is warning shippers to adopt proactive supply chain strategies that anticipate delays. With more assets and cash tied up in transport, shippers are being advised to prioritize visibility and take steps to head off supply chain break-downs.
“The challenges that shippers face simply underscore the importance of visibility. Aside from paying higher fees, there’s not much we can do to speed up a container once it’s on its way,” said Brazil.
Project44’s analysis looked at the major carriers and alliances reporting that there is a significant variance in blank sailing rates. Certain carriers Project44 reports such as HMM are skipping ports more often than not, with an average rate of 67 percent through mid-June. For the 2M alliance, both Maersk and MSC posted a weekly blank sailing average of 45 percent according to the analysis, earning the lowest overall performance for any of the major alliances.
CMA CGM, however, posted a 20 percent average blank sailing rate for the same period, leading Ocean Alliance to achieve the best schedule reliability, in terms of blank sailings.
One bright spot for shippers according to Project44 is a general reduction in blank sailing rates as schedules move closer towards late June. In addition to CMA CGM, which has a 4 percent blank sailing rate for the week 06/07-06/13, Evergreen’s rate for the same period is 13 percent, and OOCL is 12 percent.
Shippers are expected, however, to continue to face capacity shortages and delays in the coming months, despite the efforts of the ports and major carriers to adjust schedules to improve reliability and meet rising demand.