Liner Companys Begin Partial Suspension Plans After the Golden Week Holiday

With the arrival of the National Day Golden Week, the liner company's suspension plan also followed. Sea-Intelligence, a well-known maritime consulting firm, said in its latest report that liner companies will make a lot of capacity "adjustments" during China's National Day holiday.

The analyst firm expects that the number of suspensions will reach the highest level in recent years, while the current container shipping market as a whole is experiencing a trend of lower demand and lower freight rates.

Over the past few months, demand growth has stagnated, ships are underutilized and freight rates have been falling sharply. Alan Murphy, CEO of Sea-Intelligence, noted, “This is a natural way for shipping companies to take a tactical approach to air travel to curb the decline in freight rates. With Golden Week approaching, shipping companies have more than ever done so by cutting capacity. Opportunity to manage shipping costs manually, and possibly less pressure from shippers.”

The report shows that on trans-Pacific routes, shipping lines are expected to cut 22%-28% of deployed capacity in the weeks following Golden Week, compared with 15%-17% during Golden Week 2019, 2014-2018 The annual average is 9%-11%.

“Furthermore, Asia-Nordic was also high, with a slightly less than 20% drop in peak capacity after the Golden Week, which is on par with 2019 but higher than the 2014-2018 average. On the other hand, Asia- The Mediterranean route is the only one of the four major routes to experience a capacity drop during the 2022 Golden Week that is consistent with 2014-2019.”

The performance of the freight market after the National Day Golden Week will determine the future market trend. Although the current freight rate in the spot market has a certain degree of correction, the current freight rate is still at a high level in terms of historical performance, and the follow-up market may show a scene of not prosperous in peak season and not weak in off-season, but this is exactly what the liner The company intends to break the status quo of "contesting" market demand with shippers such as shippers in the industry cycle.

Industry insiders believe liner companies have posted record profits for the second year in a row, but compared to last year, the historic profits could hit the shipping industry like a boomerang. While operators' huge revenues are largely tax-free, the rest of society is suffering from factors such as high inflation, an energy crisis and a recession.