Blank Sailings: a recurrent obstacle

31 January 2023

In our industry it is a common term: the so-called blank sailings. We have once again been inundated with newspaper headlines on this logistical problem. Ultimately, what it means is that sailings are being cancelled. But what causes it and what does it mean for your supply chain in 2023?

The impact of Chinese New Year

Capacity issues are quite normal around the Chinese New Year. After all, the Chinese business community and the production of goods is at a standstill for an entire week. This is why cargo capacity is always low after the Chinese New Year.

For this reason, shipping companies usually announce a number of sailing cancellations around these holidays. These are the recurring and much-discussed ‘blank sailings’. Remarkable this year is that many shippers do not seem to have changed their procurement strategy. This is the result of existing stock which is still more than sufficient.

Why blank sailings?

Reducing capacity to raise tariffs is the most common reason for announcing blank sailings. Another reason is wanting to keep congestion at a particular port or area under control. Skipping these ports means the fleet continues at speed. In addition, it may also be that a ship needs to be deployed on a different route, for example in the case of urgent and necessary ship repairs.

The inserted blank sailings should help reduce delays and also increase the reliability of the other sailing schedules. However, this does usually have a negative impact on transit times. For instance, there are currently stacks of containers waiting to transit to Europe off the coast of Singapore, the largest transhipment port in the world. Cancelled sailings mean they cannot continue their journey to their end destination until later.

Huge drop in Chinese exports

Bad news for Chinese exports. As they recover from years of the unprecedentedly harsh zero-tolerance policy, exports have shrunk at an unimaginable magnitude compared to previous years. The latest figures show that 2022 exports, compared to 2021, fell by almost 10%. Add to that the strong global decline in demand for products due to high inflation.

Of course, rising interest rates are also causing trouble in the Chinese production market. Market conditions have been stable for some time now. The demand for space is decreasing because distribution centres across the world are full. And it is exactly because businesses already have plenty of stock that the Chinese market is set to have a hard time during the first quarter of this year.

What are the expectations for 2023?

Less cargo means less space required. The first weeks of this year have already seen many cancellations. The British news magazine The Loadstar mentions it involves 27% of the planned space already this year. According to the Norwegian sea freight platform Xeneta, the number of blank sailings in 2023 will far exceed those in 2019 (before the COVID-19 pandemic).

In addition, it is not unthinkable that shipping companies may start reducing the speed of ships to save on fuel and reduce emissions. So whereas before it was COVID-19 and congestion that made for a difficult container market, in 2023 we should not rule out the possibility that we will be hampered by falling tariffs and reduced volumes.