Container Market Strains: Omitted Sailings Unsuccessful in Stemming Spot Index Decline

The Shanghai Containerised Freight Index (SCFI) experienced a further decline of 4% today, with the principal box spot index persistently languishing below 1,000 points at 911.71.

Similarly, Drewry’s World Container Index, another composite spot indicator, witnessed a 5.2% decrement to $1,479.48 per feu, although it is positioned 4% above the average rates of 2019, prior to the pandemic.

This month, rates from Asia to North Europe and the Mediterranean are enduring substantial pressure, witnessing a 30% reduction within a thirty-day span, as articulated by Lars Jensen, the founder of consultancy Vespucci Maritime.

The prevalent sentiment in the container market continues on a downward trajectory, with freight rates experiencing a continual decline and little anticipation of a rate resurgence in October, despite the endeavours by carriers to restrain capacity availability through omitted sailings, as suggested in the most recent weekly report from Asia-based consultants, Linerlytica.

The scheduled capacity reductions over the Golden Week holidays in October remain comparatively minor to the capacity curtailed during the Lunar New Year holidays in February of this year, as per Linerlytica, positing that these are inadequate to arrest the swift rate of decline.

Projection into the future suggests that ocean carriers are adopting a prudent stance. Global forwarders are advising of a significant increase in omitted sailings anticipated for the fourth quarter on the trade routes from Asia to North Europe and the Mediterranean. The continual augmentation of shipping capacity, propelled by the deployment of new mega-vessels, is surpassing the prevailing demand, exerting considerable pressure on already saturated trade lanes, as warned by Container Xchange in a report this week.

According to Drewry, omitted sailings presently constitute 16% of mainline capacity.

“Omitted sailings, frequently disclosed at the eleventh hour, will result in diminished schedule reliability,” noted Judah Levine, Head of Research at Freightos.

The subdued outlook is also impacting the chartering sector, with Braemar highlighting that prompt tonnage availability is on the rise, and it is foreseen that operators will pursue new benchmarks across all segments.