Spot rates have been experiencing a steady decline over recent months. Shipping lines have two potential strategies in response to this trend. They could either increase blank sailings to reduce supply and stabilize spot rates, or continue to book cargo at current rates, which are still above those seen before the Red Sea crisis and pre-pandemic levels. The latter approach, while taking advantage of higher rates, could lead to further rate erosion over time.
Recent data from Asia-North Europe, Asia-North America East Coast, and Asia-Mediterranean trade lanes indicate a significant reduction in blank sailings, suggesting a shift in strategy among shipping lines. Specifically, the Asia-North America West Coast lane has seen a systematic decrease in blank sailings since 2022, with levels now nearing zero. This trend, even when considering a 4-week running average to smooth out volatility, is evident across all mentioned trade lanes.
This shift implies that the current focus is not solely on the decline of spot rates, which remain substantially higher than levels seen before the Red Sea crisis and the pandemic. Instead, shipping lines seem to be maximizing their revenue by leveraging the relatively higher rates without reducing capacity. This approach, however, may contribute to continued downward pressure on spot rates.
Source: sea-intelligence.com