Due to the continued strong demand for shipping on major routes, the number of container shipping companies suspended around the Spring Festival appears to be much smaller than in previous years. China's manufacturing industry will temporarily suspend work during the Spring Festival every year, and the corresponding shipping logistics will also slow down accordingly. Currently, the Spring Festival is less than six weeks away.
Sea-Intelligence, a shipping consulting company, said that in "normal years", Chinese factories have reduced production and trade due to the Lunar New Year holiday, and some shipping companies have adopted a suspension strategy to balance capacity and demand. However, in the recent period, due to the increase in freight rates for trans-Pacific and Asia-Europe cargo flows, shipping companies’ practices seem to be different from previous years.
Sea-Intelligence CEO Alan Murphy said that under the influence of many uncertain factors, it is difficult for the market to make consistent predictions on manufacturing production during the Spring Festival in 2021. Shipping companies also have greater difficulty in planning capacity allocation.
As of January 1, on the trans-Pacific route, the shipping companies had only announced 5 suspension voyages, while during the three-week Chinese New Year (weeks 7-9), the Asia-Europe route had only 7 suspension voyages. One. In the same period of 2020, the number of suspended voyages reached 88. If the impact of the epidemic is excluded, the number will reach 73, an increase of 10 over the same period in 2019.
If you analyze the voyage deployment of the Asia-North American West Coast trade route four weeks before the Chinese New Year in 2021 to three weeks after the Chinese New Year, and compare it with the same period in 2016-2020, it can be seen that the number of suspended flights in 2021 has not been significantly reduced.
Currently, the number of suspended voyages during the Spring Festival in 2021 is much lower than in previous years. If it reaches the capacity reduction level of previous years, the shipping company will need to suspend 37-41 voyages on the Asia-NAWC route and 12-15 voyages on the east coast of Asia-North America.
Similarly, the Asia-Northern Europe route must cancel 14-17 more voyages, and the Asia-Mediterranean route must cancel another 4-6 voyages. In Alan Murphy's view, it is difficult to predict the optimal deployment of voyages, but it is clear that the number of planned suspensions of shipping companies will be much less than in previous years.
He added that if the level of previous years is to be reached, a large number of suspended voyages must be announced soon. "
In addition, an analysis on freight rates and demand pointed out that at the end of 2020, the freight rates on the Asia-US route will continue to rise.
Freightos said that the continuous surge in demand, including shipping pressure before the Spring Festival, is enough to push up the freight rates of trans-Pacific routes.
In the first week of January, the Shanghai Container Freight Index showed that the freight rate from Shanghai to the United States dropped slightly and the freight rate remained at a relatively high level. Among them, the average freight rate from Shanghai to the West Coast of the United States was still above US$4,000/FEU. , The average freight rate from Shanghai to the east coast of the United States is still above US$4,700/FEU. At the same time, the return freight rate increased by 36% to 703 US dollars/FEU and 25% to 769 US dollars/FEU respectively. The main reason for this was the increase in costs caused by the shipping companies to dispatch empty containers.
The freight rates of Asia-Europe and Asia-Mediterranean routes have increased by 30% in the first week of 2021. Freightos pointed out that the basic freight rates (excluding surcharges) of the two routes have risen to an unfeasible $7,000/FEU, which has tripled compared to the end of October and tripled over the same period last year.
Freightos added that because demand has not significantly decreased, analysts expect that congestion, delays, equipment shortages, and high rates may continue beyond the Spring Festival and continue into the second quarter of 2021.
Freightos Chief Marketing Officer Eytan Buchman said that for cargo owners, there can be expectations. During the Spring Festival, the number of suspensions announced by shipping companies is much lower than normal, which may indicate that they will use this time to ease the number of empty containers. The problem of imbalance. "
