Blank or void sailing is a term used for when a carrier or shipping line skips a particular port or the entire scheduled sailing route altogether. Carriers across the world announce blank sailings time and again. Since COVID, however, the number of announcements for blank sailing has increased by manifolds. This has put a halt on many vessels and containers across the world, thereby delaying shipments and locking in money flows.
Every shipping line or carrier works with dedicated sailing schedules. This includes a pre-specified number of days within which they have to complete the entire voyage and get back to base. Each port mentioned in the schedule gets a specific number of days to discharge and load the vessel. Maintaining the schedule is necessary for every stop. If by any chance even one port is missed or a route is skipped, several other containers will also be compromised.
Top Reasons for Blank Sailing
Before knowing how the reduction of blank sailing improves cash flows and provides in-time deliveries, let’s take a look at the top reasons carriers and shipping lines announce them.
- Low Demand for Container Space
Blank sailing majorly depends on the demand for space present on a vessel. If there is a low demand for a specific string, the shipping line might cancel the entire voyage of a sailing route or announce a blank sailing. Carriers can also consolidate the shipments from multiple vessels due to low demand because that is more cost-effective. It is mostly planned at a short notice to meet the uncertainties and thus increase the efficiency of shipments.
When there is congestion in some port, a lot of shipping lines tend to skip the port altogether by announcing a blank sailing. This is done to avoid unexpected delays in the routine.
Vessels can encounter mechanical issues that might require emergency repairs that can only happen at a few specific locations or ports. This can prove a stretch to the original plan of sailing. If that is the case, the carriers can skip one port or choose an even urgent route so that the entire routine is on time.
- Labour Unrest or Port Strikes
As much as we would like to believe otherwise, port strikes and labour unrest is also common. These situations take a very long time to settle down and can therefore cause delays in vessel berthing, among other things, causing an urgent blank sailing for carriers.
Once on the water, the ships need to act as safe as possible or they run the risk of sinking and losing valuable cargo. Weather warnings like those of tropical storms might need the ship to wait until sailing or berthing is safe again.
- Reduced Shipping Line Capacity
Several shipping lines fall back on blank sailing because they want to optimise their operations. They also tend to use this as an opportunity to cancel previously scheduled sailings and ultimately push up or stabilise the freight rates.
The Challenges Posed by Blank Sailing
The frequency of blank sailing announcements can have a severe impact on the market standing and the relationship between clients and counterparties, especially when there are increased freight rates and cargo demands.
Directly, it also affects the storage space available. Companies might even have to end-up leasing space from any third-party service provider to fit in the overstocked cargo once the blank sailing has been declared.
As you won't be able to receive the items within the deadline that you planned due to blank sailing, you have to use your buffer stock, thereby affecting the production as well.
While your cargo is in the shipping container, your money is automatically locked in there and till the time you don’t get the delivery of the products, the money is stuck. If there is a blank sailing announcement and there is a delay in the delivery, you might have to restart the entire procedure all over again, and that will be not only a waste of time but of money as well.
Blank sailing can lead to severe confusion in the market along with misunderstandings. If the customer doesn’t receive the goods on time, there will be a negative impact. The price of the goods will be higher than expected, even if alternate transportation facilities are arranged.
How to Reduce the Blank Sailing?
Blank sailing is a very common part of the shipping business, and there’s nothing you can do to reduce it. However, what is actually in your hands is choosing a carrier or shipping company that will inform you about the blank sailings in advance.
By having a carefully curated crisis management plan in place and getting accurate forecasts from the carrier companies, you can avoid blank sailings to a large extent, thereby saving up on costs. You can keep a safety stock in hand at all times and have a backup transportation arrangement as well to ensure that your goods are delivered within the deadline in case of any in-transit emergencies.
Demurrage & Detention Charges Having an Effect on the Cash Flows
The lack of planning can have adverse effects on your cash-flows by ranging up to twenty times the value of the container when free days are used and containers have to wait at ports for a long period. Demurrage is charged if the container isn't picked-up and gated from the terminal before the free days end. These are to be paid before the shipments are picked-up.
Detention charges, on the other hand, occur when the container is out of the port. When the container isn’t delivered back to the carrier within the free days, the container user has to pay detention charges.
Both the charges added together can cause the final shipping cost to go higher than expected. However, there is a way to reduce the risk. Carriers typically charge the detention and demurrage for their carrier-owned containers (COC). As an alternative, one can opt for shipper-owned containers (SOC). By choosing SOCs, you can avoid any unexpected detention and demurrage costs from the carrier.
How Timber Exchange Helps Keep Losses Minimum Due to Blank Sailing?
Timber Exchange is a one of a kind platform that bridges the gap between exporters, importers, and freight forwarding companies to ensure there is no informational discrepancy between them. Everyone with access to the platform gets real-time visibility into the supply chain and can track the movement of the container, including the estimated ETA and the list of items present within the container.
The constantly updated Market Data Hub section of the platform has a measure of the Container Line Performance which includes the carriers that sailed the most, those that did not sail, the affected routes, and even the ones that announced blank sailings the most. Getting access to these graphs would allow you to make better decisions when it comes to choosing the freight forwarding company you can trust to safely deliver your package to the port of destination within the deadline.
As carriers expect economic fallout from the Novel Coronavirus pandemic to expect deep till the peak season, blank sailings would be a continuous effect. The best way to deal with the same and yet not let it affect the cash flow is to be aware of the container’s real-time position in the scheduled route.