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.
Hapag-Lloyd to incur additional $1bn cost a year on IMO 2020 rule
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.
Container lines hit with $300m - $350m weekly revenue loss from coronavirus
Maersk warns of ‘significant uncertainties’ from coronavirus
By March things appeared to be improving on trades from China, but a much larger global impact was to be around the corner.
CMA CGM sees start of rebound in China container volumes
Container shipping faces 17m teu demand impact from coronavirus
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.
Main container lines face $23bn loss in 2020 under ‘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.
HMM names the world’s largest containership
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.
Container shipping blank sailings reaching peak pandemic
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.
PIL in talks with Temasek unit for bailout
By the end of July there some real signs of a turnaround for container lines.
Container lines re-instate 30 sailings on transpacific west coast for Q3
In August the quarterly financial results of lines confirmed a surprising change in fortunes was underway.
Maersk profits up on capacity management despite lower container volumes
Container lines learning to make money in adversity
The start of September was to see Maersk announcing it was retiring the Safmarine brand.
Maersk retiring Safmarine and Damco brands
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.
Secondhand container prices surge on Asian box shortage
Up to a third of cargo rolled over at transhipment hubs: Ocean Insights
Come to November the impact was clearly being seen on freight rates.
Box shipping rates spike on container shortages and strong demand
As we moved into December the Asia – Europe trade was booming as well as the transpacific
Container shortage hitting exporters in US and Europe
Shanghai – Europe spot container rates jump 24% in a week
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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