Decrease in Blank Sailings Reported by Sea-Intelligence

Spot rates have been on a downward trend for several months. Shipping companies are considering two main approaches to counter this trend.

The first strategy is to increase the number of blank sailings, which would cut down on the available supply and potentially stabilize or reverse the falling spot rates. 

The alternative strategy recognizes that despite the recent decline, spot rates remain significantly higher than they were before the Red Sea crisis and the onset of the pandemic. 

This situation could encourage shipping lines to continue booking as much cargo as possible at the current rates to maximize profits.

"The latter would dissuade the blanking of sailings but will lead to more rate erosion in the longer term," said Sea-Intelligence in a report.

This dual approach presents shipping lines with a strategic choice: manage supply to boost rates or capitalize on still-favorable rates at the risk of further declines.

Recently, there has been a noticeable reduction in the number of blank sailings across several major trade routes including Asia-North Europe, Asia-North America East Coast, and Asia-Mediterranean. The significant fluctuations in these trade lanes, however, make it difficult to discern whether this decrease is the beginning of a new trend or simply a part of regular variations.

In contrast, the Asia-North America West Coast route has exhibited a clear and consistent pattern since 2022, with a steady decline in blank sailings that has continued into 2024, where the number of cancellations has nearly dropped to zero. 

Even when considering a 4-week running average to smooth out volatility in these four trade routes, the overall trend is unmistakable: there has been a significant reduction in blank sailings in recent times.

CEO of Sea-Intelligence, Alan Murphy, stated: "This suggests that the spot rate decline in itself is not the focal point, as present spot rates are significantly higher than pre-Red Sea crisis, as well as pre-pandemic. Keeping this in mind, and by looking at the blank sailings data, it seems that in the present market environment, shipping lines are attempting to capitalise as much as possible from the relatively higher rates, by not curbing capacity. The likely result, however, will be a continued downward pressure on spot rates."