Container Lines Go Full Throttle With Freight Demand Booming

Just over a year ago, businesses that rely on container shipping were hit with a surge in canceled sailings as Chinese New Year and a pandemic simultaneously shocked global trade. The big question now is just the opposite: Will many voyages be blanked at all? Maersk, the world's leading container liner, will "definitely" cancel fewer trips than normal during next month's Chinese holiday, according to Vincent Clerc, head of ocean transport at the Copenhagen-based company.

"There are two reasons: Demand for transport is so high that there is enough need for us to load more than we normally do during the two weeks of Chinese New Year," he said. "The other reason is that we need our ships to sail to bring back containers from the U.S. and Europe to Asia." Normally there's enough slack in the system to get containers in Asia, he said in a media briefing this week. "But that is not the case now when there's a shortage of equipment in general." "So we need the whole infrastructure to work throughout the Chinese New Year," and as a result, "we are going to cancel very few" sailings.

Blanked sailings are one of the main ways container lines match their capacity with demand and keep rates from tumbling. But it's a blunt tool that causes problems for the shippers of cargo that are trying to manage delivery deadlines and inventories. According to Alan Murphy of Copenhagen-based Sea-Intelligence, carriers as of last Friday had only announced five blank sailings on transpacific routes and seven from Asia to Europe for the three weeks of the 2021 Chinese New Year.

That compares with 88 total sailings nixed last year and 67 in 2019. "If they are to reach the level of previous years, a raft of blank sailings would have to be announced very soon," according to Sea-Intelligence's research note on Tuesday. Meanwhile, many customers of the container liners are growing restless in an environment where freight rates are soaring, cargo space is hard or impossible to secure, and the pandemic is roiling the demand side of their operations.

The European Freight Forwarders Association and the European Shippers' Council said this week they're asking European Union competition officials for help with supply-chain disruptions they blame on the container carriers. "Unacceptable practices also include imposing an extra fee as a price for accepting cargo at a new tariff charge, simply refusing to accept bookings at all for customers, forcing a customer with contract rates to move it to spot rates at much higher price," the groups said. --Brendan Murray in London and Christian Wienberg in Copenhagen

Charted Territory

The U.S. didn't import any Saudi crude last week for the first time in 35 years, a reversal from just months ago when the Kingdom threatened to upend the American energy industry by unleashing a tsunami of exports into a market decimated by the pandemic.

Today's Must Reads

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On the Bloomberg Terminal

  • Hard to contain | Spot-shipping rates for 40-foot containers jumped 23% sequentially in the week ended Dec.

    17, based on World Container Index data, reaching another new high. Shippers have been quoted rates above £10,000 from China to Europe.

  • Game changer | Apple's foray into electric vehicles may usher in the adoption of new battery technology that could shake up the supply chain for lithium battery materials, Bloomberg Intelligence writes.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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