Due to lack of demand, carriers cancelled 20% of Asia to US sailings for the month of May. They have already announced plans to cancel 20% of their Asia to US sailings for the month of June. The containers already booked for June sailings reinforces that demand is starting to rebound. The uptick in container volume is a positive sign for all stakeholders but also presents supply chain challenges for shippers.
Increased container volume coupled with the 20% June cancellations has created space issues for shippers. Securing space on containerships with June sail dates has become a hot commodity. Lack of space has caught some shippers by surprise. The type of space crunch facing shippers in June usually happens during the peak shipping months of August and September.
Some shippers have been quick to blame the carriers for canceling too many sailings. The carriers argue that they are operating in uncharted times due to COVID-19. They point out that cancellations are announced over a month in advance to allow shippers time to find alternative solutions. Two of the major shipping alliances have tried to ease the space crunch by adding back June sailings that had been previously canceled. While this decision helps the space situation, it is still very difficult for shippers to manage their supply chain in this type of environment.
July could bring some welcome relief for shippers as carriers have announced less cancellations than they did for May and June. Only 10% of total sailings have been canceled which is down from 20% for May and June. If demand continues to rebound, shippers are hopeful that zero cancellations will be announced for the August – October time period.
Carriers will ultimately have the final decision on how much space to make available to shippers over the next five months. Shippers need carriers to remain financially viable. What they do not need is more cancelled sailings in an attempt to prop up freight rates at the expense of their supply chains.
