- Carriers have pulled 1.67m teu of capacity out of China, costing $1.5bn.
- Manufacturers worldwide face lengthy shutdowns due to a lack of vital components.
- A near standstill production and container transport due to the coronavirus outbreak, has caused planned blank sailings and a mass of last-minute cancellations.
- 33 sailings from Asia to North Europe have been withdrawn in the past four weeks.
- Capacity withdrawn on the trade lane will be around 700,000 teu over the eight-week period following CNY.
- ULCVs departing from China “less than 20% full” and unless those vessels are topped up in other Asian ports, this will result in substantial losses for the carriers.
According to an Alphaliner survey, ocean carriers have withdrawn more than 1.67m teu of export capacity from China since the lunar new year holiday, writes Mike Wackett for an article published in The LoadStar.
Container lines at risk
Based on an average freight rate of $1,000 per teu, the cumulative revenue lost to the carriers will have exceeded $1.5bn. This will for sure put some of the less-financially secure container lines at risk.
And with a significant link in the supply chain broken, manufacturers worldwide face lengthy shutdowns due to a lack of vital components.
Planned blank sailings
According to a consultant, a near standstill production and container transport due to the coronavirus outbreak, has caused planned blank sailings post-Chinese new year and a mass of last-minute cancellations.
This has resulted in an “unprecedented” level of tonnage being withdrawn.
Survey info
Alphaliner’s survey reveals 33 sailings from Asia to North Europe have been withdrawn in the past four weeks, representing 46% of scheduled departures, with a further 17 voyages due to be pulled in the coming weeks.
Capacity withdrawn
This would take capacity withdrawn on the trade lane to some 700,000 teu over the eight-week period following CNY.
“A significantly deeper cut than in previous years and it compares with post-CNY cuts of just 340,000 teu in 2019 and 210,000 teu in 2018,” said Alphaliner.
Transpacific
It also said there was a similar situation on the transpacific, with approximately 680,000 teu of capacity removed from Asia to US west and east coast services.
Mediterranean route
For the Mediterranean route, it estimated some 290,000 teu had been withdrawn.
Trucking remaining scarce
Although China’s manufacturing production levels are slowly gaining momentum, the driver shortages and anti-virus restrictions are affecting the intermodal transport sector.
There are reports coming into The Loadstar of trucking remaining scarce and only available at vastly inflated prices.
Low vessel utilisation
According to Alphaliner, utilisation on the vessels that have sailed “remains low”. Reports to The Loadstar in the past week were of ULCVs departing from China “less than 20% full”.
Read more: Container Shipping Has Come To a Halt, Sailings Just 10%
Unless those vessels are topped up in other Asian ports, this will result in substantial losses for the carriers.
Box shortages
With the disruption in China severely affecting headhaul traffic, carriers are being obliged to hold or cancel backhaul sailings until the situation improves.
Moreover, carriers are advising shippers of box shortages in some regions, as their equipment control breaks down due to the network disruption.
Car manufacturers
Global car manufacturers that rely on sourcing parts from China are now on the front line of the crisis and facing shutdowns.
UK-based Jaguar Land Rover said yesterday it was just two weeks from having to halt production at its car plants at Castle Bromwich, Halewood and Solihull as it runs out of parts.
CEO Sir Ralph Speth said it had resorted to bringing vital parts from China in the holds of commercial flights and was currently only able to provide a single key fob to customers taking delivery of new vehicles.
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Source: The LoadStar
