No container demand rebound yet, says analyst

5/31/2020

Container lines might now be reinstating some blanked services, but this does not indicate a demand rebound is underway, according to one leading analyst.

As reported in Lloyd’s Loading List last week, Asia-Europe rates have continued to rise as lines have successfully matched lower demand with record blanked sailings.

Now, according to Alan Murphy, CEO of Sea-Intelligence, carriers are starting to reinstate some blanked services.

“The total number of blank sailings has plateaued for a few weeks now, with carriers seemingly satisfied with their current blank sailing announcements,” he said in the latest issue of the analyst’s Sunday Spotlight. “In the past week, however, a few sailings have been re-instated as carriers see sufficient demand to warrant ‘un-blanking’ these sailings.”

However, Murphy said that the latest data clearly shows that the reinstatements at this stage constitute only a small proportion of total blanked sailings, which are still far higher than during Chinese New Year (see chart below) when factory shutdowns in Asia prompt carriers to reduce capacity.

  

“It cannot be seen as a rebound in demand, nor can it be construed as ‘strong’ demand,” he added. “It can only be seen as another indication that the carriers’ approach is to blank sailings aggressively to ensure decent utilisation on the vessels that do indeed sail, and in the process avoid rate declines.”

Murphy said the median vessel size deployed on the Asia-North Europe had increased substantially from 16,000 TEU at the time of Chinese New Year in late January to 17,000 TEU by the end of the second quarter.

“In this trade, the carriers therefore seem to favour the usage of their largest vessels and setting aside smaller vessels,” he said.

“The data also clearly shows that there are still no material blank sailings for Q3 2020. As the booking uptake curve tends to start 4-5 weeks prior to loading, this means that we will likely begin to see carriers blank sailings for July within the next couple of weeks.”