The 2M Alliance between the Shipping- giants MSC and Maersk, announced earlier in the year about the disbanding of the alliance. Ever since then, the number of cancelled sailings on the same have come down to a mere 3%- that is 121 out of the 125 sailings over a 4-week period, are plying. The latest Cancelled sailings tracking by Drewry’s suggest that a little less than 10% of all sailings have been cancelled for the next four weeks. This is a big bump down from the near 24% cancelled sailings reported in early December. Now the 2M scheduling could attune to the carriers trying to do well collectively to have a good relationship with their clients, and ease them of any concerns regarding the disbanding while also putting forth a strategic message on operational reliability.
But the total cancelled sailing figure had risen to a whopping 1/4th of all sailings cancelled at a point of time, a move that was possibly implemented with the hope of quelling the fall in rates. Only, that didn’t happen. The Drewry’s WCI had registered an uptick in its weekly movement (a mere 0.75% upside), just the one time during the 1st week of January 2023, over the last 52 weeks. The index which had begun to register weekly falls in the rates since February-24, 2022 from USD 9,478 now sees itself at USD 1,897, registering a 3.8% downside in its latest weekly quote. Since January, that coincided with the holidays, and a record cancellations in shipping schedules, the index has shaved 11.1% over the two month period.
The Shanghai Containerized Freight Index (SCFI) meanwhile lost over 15% from the same period, losing about 6% post Chinese New Year 2023, and had started correcting ever since the Chinese New Year 2022. At its present quote of USD 947, its lowest since December-2019, when the pandemic began. Its outperforming counterpart in CCFI, too has registered a fall to USD 1077, as of February 23, 2023. The freight chain in China is further punctuated by the empty container situation. The container availability index of 0.65, as of end February 2023- points out to two things- an exodus of empty containers settling in the yards or imports outpacing the exports. The former is a prevalent scenario seen in China. Despite the Shanghai Port, dedicating a 3 Million TEU facility for empty containers, the pile-up has been huge over the past 5 months.
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At a policy level though, lifting of the COVID restrictions and a marginal improvement in manufacturing numbers will provide a fillip to Asian economic activity in the medium term, if not an immediate trigger, with about 1/4th of the containerized trade happening across the Asian continent. However, growth in exports, and post Chinese New year numbers for economic indicators such as manufacturing will help deduce some trends on future rates, even as analysts expect more marginal declines in the short term.
Source: Article By Gautham Krishnan. The author is a logistics professional with Fluor Corporation, in the area of project logistics and analytics, and has worked in the areas of Project Management, Business Development and Government Consulting