Importers and exporters already coping with reductions in their businesses from the pandemic are also fighting another battle – reduced capacity by ocean carriers on key lanes between the US, Asian and European markets. These planned and announced capacity cuts are known by the term “blank sailing”, and they serve the twin purposes of reducing capacity and inflating or maintaining rates.
Not unlike public transportation, ocean lines operate on trade lanes with different port calls and transit times. These services are called “strings” and often operate on a fixed day-of-the week. As an example, a carrier may call Hong Kong every Monday and make stops in Shanghai and Busan, arriving on the US West Coast 16 days later. To support operating a vessel that does that each and every week, multiple carriers have come together into groups called alliances.
The carriers within those alliances contribute vessels to operate those strings because they operate in a circular route, first coming eastward to the United States and then returning to Asia in time to be ready to load on that Monday in Hong Kong four, five or six weeks later.
A blanked sailing means there won’t be a vessel leaving Hong Kong for the West Coast (and other calls along the way) on a particular Monday, removing thousands of TEU’s of capacity from an origin port. Shippers then will need to select a service from another carrier calling a different day. That altered sailing choice could lead to a change in transit time, change in port calls, change in rate, or a combination of all three.
Alliances have announced that in the third quarter of 2020, they are planning to blank 75 scheduled sailings in an effort to align shipper demand with viable rate levels to ensure their profitability and financial health.
RIM encourages our shipper customers and those interested in our services to work with us and understand and provide the following:
- RIM has allocations with our contracted carriers for ‘n’ slots per week and per service. We encourage customers to provide forecast demands as early as possible to ensure we can protect those shipments in our scheduled allocation.
- If additional demand or flexibility are required, communicate what is most important – transit time, port call, service level or a combination of all three. We will work to align needs with availability.
- Blanked sailings mean that ships which would also carry empty containers to reposition are not in service, leading to equipment shortages at ports and inland destinations. Early bookings to lock in equipment increase the likelihood that not only is space available, but containers as well.
2020 has been unquestionably challenging. As we have always recommended when working with a freight forwarder or customs broker, transparency of the needs of your supply chain make our job easier, working together to manage the events which are surprises to both us and our customers to find and secure successful outcomes.