WE ANSWER ALL YOUR QUESTIONS :
What do changes in freight rates and blank sailings mean?
The current public health crisis has led to a major imbalance between transport supply capacity – notably supply involving very large vessels – and demand (import and export).
Freight rates are currently closely linked to supply overcapacity (or weak demand). Movement in these rates will therefore be tied to resumption of economic activity in the various global regions. Certain organisations publish spot rates which serve as benchmark indicators. This is the case for the SCFI (Shanghai Containerized Freight Index), which tracks spot freight rates for maritime transport between Shanghai and Northern Europe: it is calculated using data from 22 major (international) shipping lines and a panel comprising 26 Chinese companies, shippers and freight forwarders. It includes maritime freight (spot rates) and the relevant trade-related surcharges.
Where blank sailings* are concerned, these are also a consequence of the imbalance between transport supply and demand. Shipping lines need to adjust their services to match market requirements. We observe that blank sailings are currently impacting several trades of relevance to Europe: Far East / Southeast Asia, South Asia (India – Pakistan – Bangladesh - Sri Lanka) and North America. This is an ongoing effect accompanying the Covid-19 pandemic and it is impacting both supply and demand in international trade.
The PUSH team of experts will be conducting an in-depth analysis of this topic the results of which we will be presenting in a forthcoming issue.
* “Blank sailings” are cancellations of a rotation by one (or more) vessel(s) as determined by all the members of a consortium in order to adjust the transport offering to match major reductions in market demand. Such reductions may be foreseeable for seasonal reasons (e.g. the Chinese New Year holiday period) or a consequence of a long-lasting, unforeseeable phenomenon (e.g. Covid-19).
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