New ex-China blank sailings 'tapering off'

3/17/2020

The weekly measurement of ocean carriers’ blank sailings out of China show that the coronavirus impact is now “subsiding rapidly,”according to container shipping consultancy Sea-Intelligence in its latest weekly review of the market.

“The bulk of the blank sailings were announced during weeks 7 and 8 (of 2019). Weeks 9 and 10 have seen a clear tapering off in terms of new blank sailings, and the level of new announcements of blank sailings is back to the normal level. This means that carriers are seeing demand ramping up back to normal levels over the next few weeks as well,” commented CEO Alan Murphy.

He added: “The follow-on consequences are shown to also play out as anticipated. Back-haul freight rates are beginning to increase as carriers increasingly favour empty repositioning for the limited back-haul sailings. This is in order to get into position to capture what is expected to be a peak in Chinese exports in the medium-term future. It could well be expected that back haul rates will be pushed even higher.”

Sea-Intelligence's weekly analysis of  the market also highlighted the “rapid development” in fuel prices.

“Two months ago, IMO2020 was set to be the carriers’ major problematic issue. Today, low-sulphur fuel prices are dipping below the levels for normal fuel last year. Furthermore, the sudden price war on oil has the potential to send fuel prices back to levels seen in 2015/16 and hence make the cost of low-Sulphur fuel the least of the carriers’ problems,” Murphy noted.

Meanwhile, in a blog post, Patrik Berglund, CEO of digital ocean freight rates specialist, Xeneta highlighted the issue of box shortages that the coronavirus has thrown up and underlined the scale of the task ahead in re-positioning them.

He noted: "Forgotten in the daily virus news is that Chinese trade with the EU and US is dependent on container availability, and an unexpected consequence of the many blanked sailings, is that Chinese container yards and factories throughout the country are teeming with 20/40’ boxes that need to be re-positioned into the main EU and US ports.

“As tracked by the Hamburg-based online container service Container-xChange.com, on March 2 the container inventory in Shanghai was 47% higher than a year ago, while Hamburg was lower by 33% and Los Angeles /Chicago were lower still. It’s difficult to load containers in the Ruhr when they’re sitting outside of Shanghai.”

The impact of the coronavirus on ocean shipping volumes can be seen in the latest traffic figures issued by the Port of Los Angeles which revealed a 22.9% decrease in container throughput in February on the same month last year to  544,037 TEU.

Volumes last month were also adversely impacted by the Lunar New Year holiday in Asia.

“While cargo volumes are important, the coronavirus is first and foremost a public health crisis that needs to be brought under control with the collaboration of governments and medical experts from around the world,” said Port of Los Angeles executive director, Gene Seroka. “We are more interconnected than ever with our global partners so it’s no surprise that Trans-Pacific maritime trade has been significantly impacted.”

He continued: “As factory production in China remains at low levels, we expect soft volumes in March. Looking ahead to anticipated manufacturing improvements, we will need to return empty containers to Asia and push lingering US export boxes out swiftly.”

Seroka added. “We’re actively working with our supply chain partners to be prepared for a cargo surge once production levels ramp up.”

February imports decreased 22.5% to 270,025 TEUs compared to the previous year's levels.

Exports were down 5.7% to 134,468 TEUs. Empty containers declined 35% to 139,544 TEUs.

For the first two months of 2020, total container volumes totalled 1,350,181 TEUs, down 13% compared to last year.