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September 30 2019

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30 The Journal of Commerce | September 30 2019 www.joc.com Asia Shipping: Third Quarter Review and Outlook Special Report Carriers under fire over Asia–Europe capacity cuts By Greg Knowler BLANK SAILINGS ARE used by carriers to manage capacity during periods of weak demand, but the inconsisten- cies and tardiness of canceled sailing announcements around China's Golden Week is frustrating shippers and forwarders alike. The issue was highlighted by Sea-Intelligence Maritime Consulting in mid- September, with the analyst taking a dim view of what it regards as blank sailing gamesmanship by the 2M and Ocean alliances. On the Asia–Europe trade, carri- ers are sailing into the slow season that extends past China's Golden Week covering the holidays around the country's National Day on Oct. 1. According to volume data on routes from Asia to Europe from Con- tainer Trades Statistics (CTS), July volume increased 3.8 percent year over year, a slight upturn in volume growth that had been declining since March. To match capacity with slowing demand, a comprehensive blank sailings program covering the China holiday period was announced on the Asia–Europe trade just four weeks before Golden Week, which Sea- Intelligence said was "unneces- sarily slow and inconsiderate towards customers and reeks of tactical game theory considerations, with the two Communication breakdown largest alliances seemingly waiting for the other to make a move." Paolo Montrone, Kuehne + Nagel senior vice president and head of global trades, said there are serious issues around the carriers' capacity management. "On the same alliance, different carriers provide their own sailing schedules where the same vessel is sailing on different dates and at dif- ferent times. Shippers have billions of dollars in inventory planning based on this, and each week we are tasked to plan and execute many thousands of shipments that have to be planned around this," he said. But Montrone added that K+N is applying technology and big data to provide its customers with more reli- able information, while working with carriers to improve communication. Late notice Asia–Europe shippers also expressed frustration with the often delayed and inconsistent notifications for blank sailings, making them even more difficult to plan around. "We do our vessel planning some weeks in advance, and sudden chang- es cause a lot of additional workflow and costs, so I can agree with K+N," a Europe-based supply chain manager told The Journal of Commerce. "Worst case is a rollover situation, which al- ways kills any supply chain planning and creates a lot of costs." The Journal of Commerce put the issue to several carriers, and a spokesperson for Hapag-Lloyd said blank sailings were purely "We do our vessel planning some weeks in advance, and sudden changes cause a lot of additional workflow and costs."

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