Carriers cancel more sailings and plan surcharges as spot rates drop

Spot rates for containers on most Chinese export routes continued to fall last week, prompting ocean carriers to cancel more sailings. At the same time, from April 1, shippers will also face a 25% bunker surcharge that most ocean carriers in Northern Europe will add to their shipping costs on their routes.

On the 18th, among the 21 routes covered by the latest Ningbo Export Container Freight Index (NCFI), the freight index of 5 routes increased, and the freight index of 16 routes decreased. Among the major ports along the "Maritime Silk Road", the freight index of 16 ports fell. The NCFI said demand in the Nordic and Mediterranean markets was "sluggish", leading to "pressure on freight rates".  

In fact, all three published indices reflected a 4% to 5% decline in freight rates on the Nordic routes, with Drewry's WCI falling to 12,221USD/FEU, Xeneta's XSI falling to 12,940USD/FEU, Freightos Baltic ( FBX) fell to 12,783USD/FEU.

The epidemic lockdown in Shenzhen last week led to production delays and order cancellations. While carriers say the region's main export port Yantian is operating normally, but warehouse closures, limited trucking services and delays in yard and terminal processing have impacted cargo supply and slowed vessel hours. Nordic forward bookings are also reported to have fallen.

Despite this, carriers are preparing to cancel more sailings in response to a period of sluggish demand. 2M operators Maersk and MSC have announced three void sailings for April, which MSC attributes to "continued challenging market conditions".

MSC: Due to the current challenging market conditions causing congestion and schedule delays across the supply chain, MSC plans to cancel the following sailings for weeks 14, 15 and 16. However, customers can make reservations as MSC arranges contingency plans for other services. Please note that all shipments from Ningbo, Shanghai, Xiamen, Yantian and Tanjung Pelepas will be delivered by alternative service.

Maersk: The Russian-Ukrainian conflict and subsequent sanctions imposed on Russia by governments around the world have had a knock-on effect on the global supply chain. There is currently a high degree of uncertainty and severe delays in the service network, while restrictions and strict inspections at transit ports have affected the preparation of goods for export from Asia. In order to adjust the deployment of the service network across the market, the following vessels will withdraw from service on the AE55 route.

Blank sailing:

In order to adjust the deployment of the entire market service network and improve the predictability of the shipping schedule, Maersk has adjusted the following shipping schedules:

Far East-Europe AE55 route--inaugural voyage valid voyage change:

Far East-Europe AE1 route--Inaugural flight valid voyage change:

The Asia-North America service network continued to accumulate delays due to terminal congestion and vessel incidents. Maersk will further adjust the sailings of the following services to match actual departure weeks and provide better sailing reliability.

Changes in voyages between Asia and North America:

Lars Jensen of Vespucci Maritime said shippers should "interpret the data with caution" when rates are falling. On the one hand, the drop in freight rates "could herald more declines ahead, especially with a sudden and rapid drop in demand," he said. But he added: "The reality at the moment is that seasonal rate declines at this time of year can easily explain the declines in rates we're seeing currently."

Meanwhile, in the trans-Pacific region, NCFI commented that supply and demand fundamentals on the Asia-North America trade route are “generally sound”. However, that didn't stop last week's spot rate declines, for example, the WCI on the US West Coast fell 7% to 10,154USD/FEU and East Coast ports fell 5% to 12,276USD/FEU.

Despite softening rates, shippers are bracing for significant increases in carrier fuel surcharges and skyrocketing shipping costs. According to a related report, from April 1, most ocean carriers in northern Europe will add a 25% fuel surcharge to their shipping costs.

A few days ago, MSC said that the current global political situation is causing significant and unpredictable fluctuations in global fuel prices. Therefore, from April 15, 2022, until the situation stabilizes,

MSC will recalculate global fuel surcharges at two-week rather than monthly rates for all Asian-traded spot and quarterly contracts until further notice.

Korea Shipping has issued a notice that the adjusted new LSS (the second quarter) will be implemented on April 1, which has been increased compared to the first quarter.

▼Second quarter (adjusted)

▼The first quarter (before adjustment)