Despite all the reports that congestion is declining in many ports around the world as demand has softened, the major carriers have not been able to make significant gains in overall schedule reliability. The overall performance remains behind 2021 in spite of a decline in average delays. Analysts are beginning to believe that the industry has fallen into an ongoing range near its historic lows.
“Global schedule reliability seems to continue to follow the trend seen in 2021, fluctuating within a small range but at a slightly lower base,” said Alan Murphy, CEO of Sea-Intelligence. “The 2022 score has been slightly below the 2021 level in each of the first five months.”
Based on Sea-Intelligences’ analysis of reliability across 34 different trade lanes and more than 60 carriers, they reported a slightly better than two percent improvement in average month-over-month on-time figures for the carriers. In four out of the five first months of the year, the carriers have seen an improvement in reliability coming up from an all-time low of 30 percent in January 2022 to 36.4 percent in May. However, in 2021 the industry averaged better than 36 percent reliability in the first five months and nearly 70 percent in 2020.
The declines in backlogs, however, appear to be showing up in the average delay. Declining from an all-time high of nearly eight days in January 2022, it has been down each month this year reaching an average of 6.17 days in May.
“The average delay for late vessel arrivals decreased once again,” says Murphy. “The delay figure is now firmly below the 7-day mark, but it still continues to be the highest across each month when compared historically, albeit with the margin decreasing sharply.”
Another factor that may be contributing to the recent improvements could be the declines in demand that many of the major shipping companies have begun to report. With inflation rampant in most parts of the world and fears over a potential recession, consumer demand began to level off and decline after the Russian invasion of Ukraine. With many consumers worried about the near term, carriers have begun to pull back on their operations after nearly two years when every ship was pressed into service.
“Vessel nominal TEU capacity data shows there’s more tonnage available, but carriers appear to be putting the brakes on softening spot rates by tightening up supply on certain routes while switching tonnage to the most profitable trade lanes,” said Josh Brazil, VP of supply chain insights at industry platform Project44.
Brazil points to a rise in the number of blanked sailings in recent weeks, but with skyrocketing fuel costs he also believes that some carriers may be electing to save fuel by slow steaming vessels. It is unclear how Shanghai’s lockdowns which persisted through May impacted carriers’ performance.
Sea-Intelligence reflects that half of the 14 largest carriers saw a decline in their schedule reliability year-over-year in May. A third of the carriers also saw a month-to-month decline between April and May 2022. Despite that, Maersk, which has been leading the pack, was the first to reach 50 percent reliability in May 2022, achieving a better than four percent improvement year-over-year. Similarly, although starting from a lower point, both Evergreen and ONE achieve significant improvements to approach the overall average of the largest carriers. Among the group, MSC, Hapag-Lloyd, and Zim, however, had significant year-over-year declines in their schedule reliability.
Analysts point out that shippers historically increase volumes in the third calendar quarter as they prepare for peak selling seasons and were expected to possibly start shippers earlier this year to avoid the delays they experienced in 2021. Carriers are believed to be preparing for increased volumes meaning that the gains seen in schedule reliability and reduction in average delays may level off if volumes do increase in the coming weeks and months.