- The coronavirus outbreak in China has caused major disruption to the supply chain.
- Carrier sources say they can’t carry on much longer like this as the network has come to a halt.
- A 23,000 teu ship was sailed this week from China to North Europe with less than 2,000 teu.
- A premium to be charged for customers who manage to get their containers on the quayside.
- Freightos Baltic Index (FBX) from China to North Europe shows a modest 4% decline to $1,758 per 40ft and a minimal 1% fall for Mediterranean ports to $2,333 per 40ft.
- In the North Europe corridor, spot rates have dropped by around 15% since the Chinese new year.
- The FBX component from China to the US for the US west coast is down 1% to $1,486 per 40ft, and by the same percentage for the east coast, to $2,830 per 40ft.
The disruption to supply chain, caused by the coronavirus outbreak in China continues. This week few export sailings which were not cancelled by carriers, departed barely 10% full, writes Mike Wackett for an article published in The LoadStar.
Shutdown extended
The reported death count is in excess of 1,300 and confirmed cases are over 63,000. So, some provinces and cities in China have extended movement restrictions until 1 March.
A carrier source said that the network has come to a halt. “We can’t carry on much longer like this.” A 23,000 teu ship was sailed this week from China to North Europe with less than 2,000 teu.
Premium to get containers
The source said that if the cargo is not there, a premium should be charged for customers who manage to get their containers on the quayside.
A UK forwarder said that a carrier is planning to anchor its biggest ships and deploy smaller vessels on a very limited service until demand picks up.
When is the shipment?
According to the forwarder, the rates are too irrelevant. Initially they started with discounts at the start of the crisis, but now that has stopped. For any containers that get managed to reach the port, confirmation of when they will get shipped is a struggle. He added saying that there could be a massive spike in rates when all this is over.
Freight index
The neighbouring Ningbo Containerized Freight Index (NCFI) announced a cumulative 8% decline on the week, noting that “demand was still in the doldrums”.
Meanwhile, Freightos Baltic Index (FBX) from China to North Europe shows a modest 4% decline to $1,758 per 40ft and a minimal 1% fall for Mediterranean ports to $2,333 per 40ft.
On the North Europe corridor, spot rates have dropped by around 15% since the Chinese new year, arguably less than might be expected in a ‘normal’ post-CNY year.
From China to the US the FBX component for the US west coast is down 1% to $1,486 per 40ft, and by the same percentage for the east coast, to $2,830 per 40ft.
US importers
Freightos data suggested that for US importers the coronavirus outbreak had “intensified a trend, started by the trade war, of importers increasingly looking for regional suppliers other than China”. It said searches for other countries had increased by more than 17% so far this month.
Push up of rates
If the shutdown is extended, though rates might start to fall on the transpacific, it expected that when production picked up in force demand would “push rates up” on the trade.
Looking further ahead, George Griffiths, editor, global container freight market, at S&P Global Platts, said that the expected post-virus demand rush could see a return of peak season surcharges to compensate carriers for the lull.
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Source: The LoadStar
