- Maersk and CMA CGS announced blank sailings due to curtailed demand.
- Coronavirus outbreak in China and production shutdown contribute to prolonging the usual seasonal slump on trade lanes out of Asia.
- Chinese government requests companies operating in China to remain closed.
- Shippers recommended to consider moving ocean shipments to air, anticipating delays in goods coming out of China.
- Few airlines have suspended flights to and from China, thus reducing air cargo capacity.
The two major carriers Maersk and CMA CGS announced blank sailings due to curtailed demand, reports Supply Chain Dive.
Reason cited for slow demand
The container lines see a down trend in demand due to the coronavirus outbreak in China, the extension of the Lunar New Year holiday and production shutdown. These have contribute to prolonging the usual (Lunar new year) seasonal slump on trade lanes out of Asia.
The two carriers Maersk and CMA CGM say that the operations at terminals, warehouses, depots and offices in China, with the exception of Wuhan, continue uninterrupted.
Request from the government
According to CMA CGM, the Chinese government has placed a request to all companies operating in China, to remain closed until Monday. Many local governments have extended the holidays to Feb. 9 and Feb. 13 in Hubei province, where Wuhan is located.
Effects of production shutdown
As soon as the production shutdown is lifted, there will be a backlog of shipments and thie will most likely lead to increased freight rates and cargo delays, according to Freightos.
Reason for Low demand
Maersk’s comment
According to Maersk, the decreased demand is the result of extended holiday and has also prompted the need for blank sailings. “Endeavours to balance our network to match reduced demand.”
CMA CGM’s comment
CMA CGM noted that the demand deterioration on the Asia / North Europe trade to be caused by the Coronavirus, that lead to blank sailings.
Both carriers proposed alternative coverage for shipments.
Blank sailings and alternatives
BIMCO in an analysis email to Supply Chain Dive said that the trend of blank sailings “is expected to persist if the virus continues to spread.”
Freightos recommend shippers to consider moving ocean shipments to air, anticipating delays in goods coming out of China. It also added that the demand spike will also affect air freight rates.
Air cargo capacity
As British Airways, United Airlines and Cathay Pacific have suspended flights to and from China, the air cargo capacity is also reduced.
Not all carriers have blank sails
A Hapag-Lloyd spokesperson told Supply Chain Dive that, “We don’t have any plans to blank sailings or omit ports. But we are watching the developments closely and will decide on short notice.”
ONE said in a customer advisory that other than ports in Hubei province, “vessels are still maintaining their normal port calls and operations.”
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Source: Supply Chain Dive
