[030620.EN.BIZ] Capacity Crunch Continues On Asia-Europe Trade, But It's Guesswork For The Summer

HEADHAUL cargo visibility for Asia-North Europe carriers is still unclear for July and August, with much depending on the speed of the economic recovery and the appetite of consumers to spend, following the easing of Covid-19 lockdowns.

But for now carriers appear to be holding fire on announcing further blanked voyages, presumably until they see whether the current - some would say "artificial" - surge in demand can be sustained.

According to eeSea data, carriers have so far announced only 21 blanked sailings out of the 122 advertised for June, and in July just three out of 126 sailings, suggesting a more optimistic outlook by the shipping lines.

However, Alan Murphy, chief executive of analyst Sea-Intelligence, warned that shippers could still see a sharp increase in the number of banked sailings in the third quarter.

"With the third-quarter peak season approaching, we are anticipating a large number of blank sailings from July onwards. We advise market participants to prepare for cancellations of services that have already seen substantial cancellations.

"On the transpacific, we expect THE Alliance's EC3 and PS5 and the 2M's TP8/Orient to be heavily blanked, while on Asia-Europe, we expect it to be 2M's AE2/Swan and AE20/Dragon and THE Alliance's FE4," Mr Murphy said.

Forwarders have mixed views on the sustainability of the demand surge, some reporting demand starting to return to normal, according to The Loadstar, UK.

However, the general consensus is that it is the vast shipments of anti-virus PPE and orders that could not be cancelled before retail lockdowns that are filling the ships currently departing Asia.

"We're fighting for space daily with shipping lines," a UK forwarder said. But another source said he could see demand "falling off a cliff" in a few weeks' time.

"New orders will not be placed anytime soon as the reopened department stores need to try to gauge the appetite of financially stressed consumers to spend on non-essential and luxury goods," he said.

One liner source told The Loadstar of being "surprised, but very pleased" about the unexpected demand spike, but the view being taken internally on the outlook was "wait and see", although "cautiously optimistic".

Source : HKSG.