Hope for Asia rates, space and equipment
The announced Chinese New Year blank sailings are noticeably lower than in previous years, raising hopes that the lines are concentrating on repositioning empty equipment, which will increase capacity and may lead to some rate reductions.
The strong demand for sea freight that began in the 2nd quarter of 2020 and the shortage of empty equipment that began to bite in the final quarter has continued through the Christmas and New Year holiday period, with freight rates from Asia continuing to rise.
Chinese New Year (CNY) falls on Friday the 12th February in 2021, with the official public holiday running from the 11th to 17th February, which in some cases may be extended by employers, to allow employees to enjoy the festive period.
Container shipping lines typically announce blank sailings around CNY to reduce capacity ahead of the usual drop in seasonal demand, but so far this year blank sailings are noticeably lower, with around 10% of capacity blanked, compared with 40% last January, raising hopes that the lines are concentrating on repositioning empty equipment.
The apparent decision by the shipping lines and alliances to blank far fewer sailings over the CNY will introduce much needed capacity, support the movement of empty containers and reduce pressure on the UK’s ports and overall freight infrastructure.
Ongoing congestion at Felixstowe (and to a lesser extent Southampton and London Gateway) continues to disrupt operations for shippers, mangles vessel reliability and hinders the shipping lines ability to repatriate empty containers, which all compromises the line’s schedules and has been a major factor in driving up freight rates.
We are hopeful that the lines actions will soften rates from Asia after CNY, with lesser demand and limited blank sailings increasing capacity and leading to some rate reductions from today’s high levels, but we do not anticipate any market “crash.”