
The container logistics industry stands united in its conviction that the negligible disruptions and delays resulting from the Golden Week holiday period will have no impact on the container prices and freight rates. Comprehensive analysis confirms that the container logistics sector remained resilient during the Golden Week holidays, experiencing minimal disruption.
Furthermore, it is anticipated that any residual post-Golden Week impact will also be brief and manageable. This is according to the Golden-week analysis published by Container xChange, an online container logistics platform.
Container xChange surveyed around 1500 supply chain professionals to gauge the impact of the golden week on the container logistics industry. 74% of those surveyed confirmed that they did witness container shipping delays and disruptions during the Golden week holidays in China, albeit negligible.
Traditionally, Golden week holidays lead to fluctuations in container movement in and out of Asia, often because many factories and businesses in China typically close or operate with reduced staffing. Hence, importers from the west often plan the shipments in advance. This often results in reduced shipping capacity during and after the Golden Week.
However, this year in 2023, the respondents confirmed that a. there have been minimal disruptions due to the Golden Week holidays in China, and b. These are going to have a negligible impact on the shipping cycles.
As part of the survey, one of the customers, Wayne Zhang, Project Specialist, YFHEX Logistics based in China shared, “I think the impact of the container logistics shutdown by this Golden Week should be short-term and will be resumed soon after the holiday. As for the impact on container exports, terminals and depots, it should be very little. Shippers, carriers, and importers have predicted and prepared ahead of the holiday, and they have a person on rotation to deal with emergencies.”
Another customer, Leslie Huang, Container Manager, Shenzhen Yuan Shi Container Service, found little or no impact on their container logistics business. Commenting on the topic Huang said, “Normally we have prepared the containers ready to be exported before the holiday. With preparations ahead, the current market situation is not very good, so we see there is little impact during the holiday.”
The current market conditions are far from ideal, primarily due to a noticeable lack of demand. This unique situation sets it apart from previous years when disruptions were a common sight in China during the Golden Week. What’s triggering this shift is a blend of diminished demand and an excess of available vessels. In response, shipping companies are opting to cancel a substantial portion of their services.
It’s not limited to the Golden Week alone; these cancellations extend to both pre- and post-holiday periods. This strategic move reflects the carriers’ efforts to navigate through the challenging market conditions characterized by soft demand and an oversupply of tonnage.
Responding to this huge supply and demand imbalance, several shipping companies, including Maersk, have recently announced the implementation of blank sailings. Essentially, this means that the shipping services the logistics industry typically rely on may not be operational during specific weeks. Consequently, shippers, carriers, etc may need to adjust departure schedules, arrival times, and transit durations.
The anticipated capacity reductions as a percentage during the Chinese holiday period are now projected to be the most significant when compared to previous years.
Typically, to balance supply and demand and avoid underutilized voyages, shipping companies often announce blank sailings during this period making the rise in blank sailings during Golden Week a common occurrence in the shipping industry.
“Capacity reductions, stemming from stalled demand growth and underutilized vessels, have led to a significant and consistent drop-in freight rate in recent months. To address this challenge, carriers are strategically turning to blank sailings to counteract the downward trend.
Blank sailings are being implemented during what is traditionally a peak season for shipping, particularly as retailers prepare for year-end sales. The crucial question now is the duration of these capacity reductions and whether carriers intend to maintain lower capacity levels in response to the challenges faced on major shipping routes.”, said Christian Roeloffs, CEO and Co-Founder, Container xChange.
In 2022, carriers such as Maersk, CMA CGM and Hapag-Lloyd among others also resorted to tactical blank sailings ahead of the golden week shipping lull. Carriers find an opening to cancel more sailings than their usual practice, and this might lead to reduced pressure from cargo owners. This shift allows carriers to strategically manage shipping capacity, potentially influencing freight rates.
According to recent data from Drewry dated 06 October 2023, in the primary East-West shipping routes – Transpacific, Transatlantic, and Asia-North Europe & Med – a total of 67 sailings have been cancelled. These cancellations are distributed across weeks 41 (October 9 to October 15) through week 45 (November 6 to November 12).
To put this in perspective, there were originally 660 scheduled sailings, making for a cancellation rate of 10%. Within this time frame, the Transpacific Eastbound route will see 52% of the sailings being cancelled, while the Asia-North Europe and Med route will experience 37% cancellations. The Transatlantic Westbound trade will account for the remaining 10% of the cancelled sailings.
To read our recent analytical piece on blank sailings, please visit here.
Average prices for containers in China continue to crash post-Golden week
As shown in the table below major ports of China, Guangzhou, Ningbo, Qingdao, Shanghai, and Shenzhen saw the average trading price of 40 HC cargo-worthy containers going down marginally during the Golden week.
Average container trading prices in Chinese Ports for 40 HC containers
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Port
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Week as of 02 October 2023
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Week as of 09 October 2023
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Guangzhou
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$1690
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$1650
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Ningbo
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$1950
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$1860
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Qingdao
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$1810
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$1810
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Shanghai
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$1730
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$1680
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Shenzhen
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$1630
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$1590
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The decrease in container prices in China suggests that there is no uptick in demand for containers from US and EU regions post the golden week.