News / More blank sailings 'a harbinger' of soaring rates on the transatlantic

Container spot rates on the transatlantic headhaul North Europe to North America east coast tradelane have recovered to pre-pandemic levels, but have so far not seen the hyper-inflation impacting other routes.

According to Friday’s Freightos Baltic Index (FBX) reading, the price for a 40ft container on the route stood at $2,026, which is on par with the rate in April last year and compares with a low of $1,622 in September.

But the lull could end soon, according to one leading analyst, as carriers focus on maximising returns from relatively underperforming parts of their networks.

In comparison with the unprecedented increases in spot rates on Asia-Europe, the transpacific and most other routes from Asia, the transatlantic tradelane has “remained remarkably stable throughout the pandemic period,” said Niels Madsen vice-president of product and operations at SeaIntelligence.

However, he warned that a significant increase in the number of blank sailings on the trade could be “a harbinger of coming rate increases”.

“Blank sailings on the transatlantic developed quite differently from the other deepsea trades,” said Mr Madsen. “Last year there was only one H1 spike in blank sailings, as the coronavirus impact was only seen from the spread of the pandemic in Europe and North America.”

According to the eeSea liner database, blankings on the trade began escalating in May, and carriers blanked between eight and 10 sailings a month on the transatlantic from July, culminating in 11 out of a pro forma 86 in December.

And the trend continued in the first two months of this year, with 10 out of 74 sailings blanked in January and four out of 64 last month.

February’s total headhaul trade capacity stood at 592,000 teu, the lowest for over a year, although eeSea records that capacity this month will increase to 699,000 teu, with some 57% of that operated outside the three main shipping alliances.

SeaIntelligence said the “significant spike in blank sailings towards the end of 2020” on the route was “very much in contrast with the transpacific and Asia-Europe”.

Mr Madsen added: “Furthermore, the level of announced blank sailings for March and April are also at consistently elevated levels, compared with the same period last year, which is also in contrast with the aforementioned trades.”

Indeed, according to The Loadstar’s enquiries in the market, ships have been running “pretty full” from North Europe, according to one contact, who added that the “e-commerce boom in the US has boosted booking demand for as far as we can see”.

Mr Madsen suggested the forthcoming blank sailings on the transatlantic could be less to do with softer demand and more to do with carriers’ desperate search for tonnage to compensate for the chronic port congestion on the US west coast, where an average of 30 ships a day are idled at anchorages in the San Pedro Bay.

“Vessel redeployment from less-profitable trades could well be argued as a measure of ‘first aid’ to thaw the transpacific trade,” said Mr Madsen.

“From a quantitative level, there appears to be a drive to shift capacity to more profitable trades, which in turn can only have one consequence – an increase of transatlantic rate levels,” he warned.