News / Blank sailings holding down spot rates as China to Europe space tightens

Uncertainty on Covid policy is prompting shippers to adopt a wait-and-see approach to sourcing in China, with carrier blank sailings the “only thing stopping” further rate declines.

Strict lockdowns led to a dramatic drop in China’s economic growth in Q2, to 0.4%, compared with 4.8% in the first three months of the year, marking the country’s slowest growth since the Covid crisis began in 2020.

Furthermore, the risk of additional lockdowns, combined with high inventory levels in the west, appears to be dampening ex-China ocean freight demand.

Thomas Gronen, head of Greater China at Fibs Logistics, told The Loadstar: “With recession and inflation pressure in the US and in Europe, client feedback is that they are waiting to sell existing inventory before re-ordering.

“Plus, there is very strong quarantine and lockdown hesitation, which is putting off buyers travelling to China.”

Mr Gronen predicted a long recovery for Shanghai, post-lockdown, and he said so so far his expectations had been “pretty much fulfilled”.

He explained: “The ocean volumes have only just recovered, and are rather on the ‘soft’ side. Spot market rates are definitely down, trending, with some carriers moving faster on this subject than others. Overall, spot rates available now are down by around 25% compared with six months ago, and over 50% a year ago.”

Indeed, Mr Gronen believes without the capacity crunches created through blank sailings, the decline in spot rates would have been even more severe.

For example, a Fibs update noted 67 blank sailings from Ningbo between 20 June and 24 July, meaning space to Europe getting tight in August.

“The only market which is still moving strong is the Middle East, but that’s because mostly smaller vessels are being used on these lanes,” Mr Gronen added.

According to FourKites, Shanghai’s 14-day average ocean shipment volume is now down only 2%, compared with 12 March, however, when the lockdowns first started.

Elsewhere in China, shipment volumes have “remained strong”, with volume at the port of Shenzhen up 25% and at Ningbo-Zhoushan, up 35%, for the same period, FourKites added.

Philippe Salles, VP strategic solutions (ocean), added: “While the situation is easing, we are nowhere near the shipping volumes and transit times [from China] we saw before Covid.”