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Coronavirus impact on container shipping grows albeit at slower pace

Coronavirus impact on container shipping grows albeit at slower pace
Whilst the outbreak of the coronavirus (COVID-19) continues to have an impact on container shipping, the fallout is slowing down, according to analyst Sea-Intelligence.

Sea-Intelligence data has suggested that a stabilisation is seen in terms of blank sailings since Chinese New Year in January, around the same time that COVID-19 cases started to increase at a faster pace.

In the weeks of 5-15 of 2020 starting 27 January, blank sailings on the transpacific increased to 111, of which 48 have been blanked due to COVID-19 and the remainder due to the normal seasonality of Chinese New Year. On Asia-Europe, blank sailings increased to 75, of which 29 are due to COVID-19.

As at 1 March 2020, volume loss due to blank sailings was at 1.9m teu. At a rough average freight rate of $1,000 per teu, this equates to revenue loss of $1.9bn for the carriers.

“Even though the carriers have announced seven more blank sailings over the past week, which corresponds to an additional 7% removal of capacity, the pace of new blank sailings has clearly declined, suggesting a belief from the carriers that volumes will slowly be brought back to normal levels,” said Alan Murphy, ceo of Sea-Intelligence.

“This, however, does not mean the ripple effects are over – far from it. We have already outlined in the past weeks how this will impact the round-trip dynamics and create shortages of both vessel capacity and equipment availability,” Murphy warned.

He observed that carriers are already pushing rate increases on account of this, and for some backhaul shippers the coming weeks might be a matter of whether they can get their cargo moved at all, almost irrespective of the price they are willing to pay.

Murphy added that carriers have managed to maintain freight rates thus far through proactive capacity management, staving off a “feared financial-crisis-like rate implosion.”

Read all Seatrade Maritime News coverage on the impact of the coronavirus on shipping