Blanked sailings happen on a frequent basis, but not at the rate we’re seeing now. The increased number of blank sailings are causing problems through the logistics chain. Making container shipping more expensive for users with rising demurrage and detention charges.
It’s nothing new that carriers announce blank sailings from time to time. What is new, however, is the amount of blanked sailings since the Coronavirus made its way around the world. Putting a halt to many containers and vessels being shipped around.
In the graphic above, you can see the weekly number of announced blanked sailings because of the Chinese new year, coronavirus outbreak in China, and the global pandemic, according to Statista. Since April around 149 blanked sailings have been announced. 108 of these were announced between the Chinese New Year and mid-March when the Coronavirus was spreading rapidly in China.
Since then the number of blanked sailings has gone down. But they still play a role in creating disruptions through the logistics chain, creating storage issues at ports, and extra charges for users of containers. Disruptions that have lead many to talk about force majeure.
Blank sailings and deadlines
Carriers and shipping lines work with sailing schedules. These schedules give them published dates of arrival at the destination ports. Along the route, each port has a specific number of days to discharge and load the vessel.
These timelines need to be kept at every stop. Let’s say the final destination on the route is Dubai. For the shipping line, Dubai is a key port and the vessel must arrive on time. Otherwise many containers will be compromised.
But keeping up with the schedule on the route doesn’t always go smoothly. If the vessel is running late at an early port, because of weather conditions or delays at another port, the shipping line will have to announce a blank sailing. Otherwise, the vessel won’t be able to meet the deadline at the key port, Dubai.
With a blank sailing, containers that are meant to be discharged at the now-canceled port will have to wait at the pick-up port until the next vessel with the same destinations arrives. That not only impacts the freight rates but also the skyrocketing surcharges.
Demurrage and detention on the rise
With the many blanked sailings more containers get stuck around the world. E.g. in the U.S. many empty containers are stacked at the ports waiting to be shipped to Asia. But due to the blanked sailings in the U.S., there are fewer spots open on the vessels that do port of calls at the pre-destined ports.
However, it’s not only the empty containers that are waiting. Also, filled containers are being delayed. At ports, terminal operators cancel work shifts because of the lower import. This is sometimes done with such short notice, that it isn’t possible to adjust the pick-up schedules. The lack of planning means that the containers will have to wait at ports for a longer period of time, using their free-days.
When the free-days have been used, the demurrage and detention charges are added. Charges that can accumulate up to 20 times the value of the container itself.
If a container isn’t picked up and gated from the terminal before the free-days have been used demurrage will be charged. Demurrage charges will usually have to be paid before shipments can be picked up.
On the other hand, detention charges occur when the container is out of the port. In case the container isn’t delivered back to the carrier within the free-days. Detention charges will also be added if a container user has picked up a container for loading and hasn’t returned it within the set free-days.
Avoid demurrage and detention
However, there is a way to reduce the risk of being handed a large bill for demurrage and detention charges. These charges are imposed by the carriers for their COC containers (carrier owned container). An alternative to these containers, are SOC containers. Also called shipper owned containers.
With SOC containers you avoid unexpected demurrage and detention costs from the carrier. Instead, when you find SOC containers at xChange you negotiate a per diem charge with the supplier in case you exceed the free-days. This charge is significantly lower than the demurrage and detention.
Advantages with SOC containers
With SOC containers you’re in charge of hiring a carrier and other parties to transport the shipment. But SOC containers also give you more flexibility, control, and independence.
One of the benefits of SOCs is that you control the costs and can avoid the expensive demurrage and detention charges. You’re also in charge of the supply of containers, giving you the opportunity to source containers on your own.
You’re also able to choose what containers you need, which condition you want them to be in. And whether you want to lease or buy the containers.
With SOC containers you’ll have to put in the time to find partners for every step of the route. But finding SOCs doesn’t have to be difficult.
On Container xChange you can find SOC containers in more than 2500 locations. All you have to do is type in your pick-up and drop-off location. Within seconds you’ll get a list of partners, who either have containers waiting to be used or need to use containers.
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