Trans-Pac blank sailings a harbinger of soft summer imports

Trans-Pac blank sailings a harbinger of soft summer imports

Carriers have scheduled 80 blank sailings to the West Coast and 43 to the East Coast from early April into July, according to Sea-Intelligence Maritime Consulting. Photo credit: Shutterstock.com.

While the rate of decline of Asia imports into the US eased in April, carriers are nonetheless maintaining their grim expectations for further container volume deterioration with dozens of blank sailings scheduled through late July.

Carriers have scheduled 80 blank sailings to the West Coast and 43 to the East Coast from early April into July, according to Sea-Intelligence Maritime Consulting. Because transit times from Asia are about two weeks to the West Coast and three weeks to the East Coast, carriers expect the summer months, which are normally the ramp-up to the peak season, to be brutal.

“The amount of blank sailings is staggering,” Alan Murphy, CEO of Sea-Intelligence, said in his Sunday Spotlight this week.

Containerized imports from Asia fell 1.7 percent in April compared with the year-ago period, after a year-over-decline of 17.4 percent in March, according to numbers made available Thursday from PIERS, a JOC.com sister company within IHS Markit. April marked the seventh consecutive month of year-over-year declines in US imports from Asia.

That lengthy period included a relatively weak peak season in 2019, which reflected tariffs on imports from China, two weeks of factory closures in Asia in February associated with the Lunar New Year celebrations, extended factory shutdowns in China into March because of the coronavirus disease 2019 (COVID-19), and demand destruction in the US in March and April due to the virus.

In announcing Maersk Line’s first quarter earnings results Wednesday, A.P. Møller-Maersk CEO Søren Skou said Q2 will be a difficult period for the global liner industry. Maersk’s volumes on the major east-west trades are projected to decline 20 to 25 percent, and the carrier will cancel up to 140 sailings in those trade lanes.

The National Retail Federation and Hackett Associates, in its Global Port Tracker last week, projected year-over-year double-digit declines in imports each month from May through August as consumers are expected to pull back on all but essential purchases until the economic situation improves. 

Sea-Intelligence has recorded a total of 83 blank sailings in the trans-Pacific trades to the West and East coasts attributed directly to demand destruction in North America. That compares with a total of 44 canceled sailings to both coasts earlier this year linked to Lunar New Year factory closures and 42 blank sailings due to the impact of COVID-19 on supply chain disruptions in Asia in February and March.

Murphy said although the number of trans-Pacific blank sailings scheduled from mid-May into July is staggering, the canceled sailings are also stabilizing in the range of four to seven each week to the West Coast and two to five each week to the East Coast. The blankings are helping carriers to balance supply and demand in the largest North American trade lane.

“We appear to ‘sit at the bottom’ in terms of demand and capacity, and hence service networks have been adjusted to this new reality,” Murphy said. 

Uncertainty shrouds peak-season volumes

Retailers, carriers, and industry analysts are hesitant to predict cargo volumes for the peak-shipping season from August through October. Global Port Tracker’s projection goes no further than September. Maersk’s Skou said visibility beyond the second quarter remains “extraordinarily low.” 

Murphy said late summer-fall projections are problematic because import volumes in North America and Europe will depend on how successful countries are in containing the COVID-19 virus and the pace at which countries can reopen their economies in the coming months.

“Even in cases where the reopening might be more rapid, it remains an open question to which degree this will translate into a rekindling of the associated economies,” he said.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.