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July 20 2020

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20 The Journal of Commerce | July 20 2020 International Maritime FORWARDERS ARE REPORTING tight- ening space on the Asia–Europe trade as blank sailings have left little room to accommodate rising import demand from Europe's reopened economies. Carriers have so far managed to keep supply approximately in line with demand, evidenced by spot container freight rates that continue to rise despite falling volumes. Forwarders are keeping a watchful eye on bookings and avail- able capacity, but two of the leading non-vessel-operating common car- riers (NVOs) on Asia–Europe routes are not expecting widespread rolling of cargo such as occurred recently on the trans-Pacific. Dominique von Orelli, head of ocean freight for DHL Global For- warding, said he does not believe Asia–North Europe will follow the same path as the trans-Pacific, where NVOs reported carriers rolling cargo as they struggled to accommo- date an unexpected surge in imports since late May, when most non- essential businesses reopened after COVID-19 lockdowns. Von Orelli noted that Asia–North Europe carriers have deployed extra loaders and sweepers, while shippers have shifted their volume around to different alliances as they adjust to blanked sailings. "The situation is very tense, but under control," von Orelli said. "A sudden spike could take carriers by surprise, but we don't expect this to happen given the forecasts. Increased volume? Yes. A real spike? No." Franziska Reckling, global sea logistics marketing manager for Kuehne + Nagel, told The Journal of Commerce capacity was tight- ening on many trades, including Asia–Europe, but the forwarder has not had any issues securing space or with cargo being rolled. Reckling attributed this — at least in part — to accurate volume projections from K + N's shipper customers. "Customers who are able to make quality forward-looking vol- ume forecasts for six to eight weeks will, of course, benefit from this routine, and it allows for proper allo- cation planning and thus improves operational stability," she said. European lockdowns began to ease in late May, when retail outlets reopened and factories resumed pro- duction, which has led to an increase in demand for goods from Asia at the same time as significant capacity has been taken out of service by carriers. The large number of blank sail- ings on Asia–Europe routes has left little room for error should there be any spike in demand, with vessel capacity on the trade well below pre-coronavirus levels, according to maritime analyst Alphaliner. On June 1, weekly deployed capacity in the Asia–Europe trade stood at 361,100 TEU, down 17.1 percent (74,300 TEU) from the same point last year. Not all forwarders are positive about the supply–demand balance. Keith Gaskin, group commercial director for SEKO Logistics, said the capacity cuts will lead to an increase in cargo being rolled in Asia through the summer. "With so much westbound ocean capacity removed from service, July could be ugly," Gaskin told The Jour- nal of Commerce. "With a lot of the importers and retailers returning, demand is currently outstripping Rocking or rolling? Rising Asia–Europe volumes to test carrier capacity management By Greg Knowler Weekly deployed capacity in the Asia–Europe trade as of June 1 was down 17.1 percent from the same date last year. $570 $670 $770 $870 $970 $1,070 $1,170 Oct.11 (Week 41) Oct.25 (Week 43) Nov.08 (Week 45) Nov.22 (Week 47) Dec.06 (Week 49) Dec.20 (Week 51) Jan.03 (Week 1) Jan.17 (Week 3) Jan.31 (Week 5) Feb.14 (Week 7) Feb.28 (Week 9) Mar.13 (Week 11) Mar.27 (Week 13) Apr.10 (Week 15) Apr.24 (Week 17) May.08 (Week 19) May.22 (Week 21) Jun.05 (Week 23) Jun.19 (Week 25) Jul.03 (Week 27) Shanghai to Nor th Europe Shanghai to Mediter ranean Asia–Europe spot rates continue edging upward despite falling volume Source: Shanghai Shipping Exchange © 2020 IHS Markit Shanghai Containerized Freight Index rate per TEU Up 32% from July 2019 Up 38% from July 2019 Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics

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