Container ships outside the port dry, the traditional shipping season has not arrived.

The summer has been a slow time for container shipping routes from Asia to Europe and elsewhere, dampening hopes that retailers would place orders for the year-end shopping season.

Retailers are still trying to work through inventories of everything from clothing to electronic parts, so demand for container shipping is low, meaning that some container ships must wait outside ports because part of their scheduled trips, known as "blank sailing," have been canceled.

Liner giant MSC last week cancelled a voyage from Asia to Northern Europe for the MSC Deila, a 366-metre vessel capable of carrying 14,000 20-foot standard containers (TEUs), citing "weak demand" on the route. The previous week's schedule was also cancelled. Also at the end of July, MSC also cancelled scheduled trips of MSC Topaz on the same route.

Sanne Manders, chairman of freight broker Flexport Sea and Air, said: "Carriers are doing a lot more... 'Capacity management', that is, shelving ships. If you fly to Singapore, you can see these ships are moored outside the port... A lot of ships are out there waiting for better returns."

The blank schedule is in line with poor financial results from the major carriers. CMA CGM said last month that second-quarter earnings before interest, depreciation and amortization (EBITDA) fell 73 percent year on year to $2.6 billion, while Hapag-Lloyd's first-half EBITDA fell 65 percent year on year to $3.8 billion.

Maersk also reported second-quarter EBITDA of just $2.91 billion, a far cry from the $10.3 billion it earned in the same period in 2022.

Freight rates tend to fall rather than rise

Looking ahead to the next few months, Flexport's Manders said, there is still a lot of capacity to be added, especially in Marine, which means rates will be significantly depressed.

Berstein also said that shipping companies have used the money they earned during the pandemic to order a record number of ships, meaning that thousands of extra TEU capacity will come in, making it difficult for shipping rates to continue to rise in the short to medium term.

BIMCO chief shipping analyst Niels Rasmussen said shipping rates from the Far East to Northern Europe have been under intense pressure for more than a year. In the three months from March to May, for example, spot rates for container ships on the Shanghai Shipping Exchange (SSE) fell by almost 90 per cent year-on-year.

Excess inventory at the retail end

Flexport regularly surveys customer inventories, and according to a March survey, 62 percent of customers reported excessive inventory, which fell to just over 40 percent in May, but remained above 40 percent in July, indicating that inventory levels remained high and kept imports relatively subdued.

He added that the electronics, high-tech and apparel industries had "far too much" inventory, while the furniture industry was one of the few industries with the right amount of inventory. "We may need help to clear the inventory of goods during the year-end shopping season."

Simon Heaney, senior manager of container ship research at shipping consultancy Delury, said "empty ship sailing" has been going on for years and represents a period of heavy demand in the container shipping market, so it is trying to balance the market, behind which is weak retail sales and excess inventory.

According to Delury, there were 13 recorded "empty ship voyages" from Asia to Europe in July, with a similar number estimated for August and September.

Bernstein estimates that U.S. retailers held a total of $778 billion in inventory in May, the highest level since 2019.

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