With the onset of the Covid-19 pandemic in the first quarter 2020 it did not look like being a good year for container shipping, but a very different picture has emerged in the second half with sharp demand growth on major trades, a shortage of containers and soaring freight rates.
The year actually started with a concern over fuel prices as very low sulphur fuel oil (VLFSO) prices soared as the IMO 2020 low sulphur regulation came into force, and for a short while lines that had invested in scrubbers appeared to have made a very wise decision. However, the surge in fuel prices was short lived as oil prices plunged.
As Covid-19 took a hold in the world’s largest container export market China things quickly started to look even tougher for the already battered sector.
By March things appeared to be improving on trades from China, but a much larger global impact was to be around the corner.
With the world in lockdown and volumes plunging the situation looked grim for container lines and in April analysts Sea-Intelligence forecast that container lines could lose $23bn in a worst-case scenario.
Amid all of this South Korea’s HMM started launching the world’s largest ever boxships at 24,000 teu in capacity.
Meanwhile blanked sailings and a quick reaction to fast changing market conditions were to prove to be an invaluable tool to container lines in riding out the slump in volumes.
The unprecedented management of capacity would herald a recovery in a few months, but it was too late for the world’s largest 10th largest container line – Pacific International Lines (PIL) – which sought financial rescue.
By the end of July there some real signs of a turnaround for container lines.
In August the quarterly financial results of lines confirmed a surprising change in fortunes was underway.
The start of September was to see Maersk announcing it was retiring the Safmarine brand.
By October it was clear that volumes had surged well ahead of expectations and that equipment shortages were becoming an issue in key export locations.
Come to November the impact was clearly being seen on freight rates.
As we moved into December the Asia – Europe trade was booming as well as the transpacific
As we move to the end of 2020 lines look set to report some of their best annual financial results in a years, a situation that appeared implausible just a few months earlier.
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