Coronavirus: China port calls drop as blanked sailings rise
Carriers are removing capacity to match the falls in Chinese export demand. There is now an emerging threat to shipping lines of falling capacity on backhaul trades
Box shipping could lose up to $350m a week in revenues as China factory output remains constrained
THE impact of the coronavirus on ship calls to major Chinese ports has been revealed in new figures from Lloyd’s List Intelligence.
The extended Chinese New Year holiday closed down much of China’s manufacturing, resulting in fewer exports.
As a result, ship calls at Shanghai and Yangshang are down by nearly a quarter compared with the comparable week last year, Lloyd’s List Intelligence data shows.
Comparing the weeks before, during and after the lunar holidays in 2019 and 2020 shows a slight increase in vessel calls at the two ports this year during the week before and the week of the new year closures.
But with the holiday extended in many parts of the country to the end of last week, ship calls were down 23% for the six days of Week 6 running from last Wednesday to today.
The figures coincide with an increased number of blanked sailings by container lines, which has seen a total of 82 cancellations on the transpacific trade and another 54 on the Asia-Europe trade, according to figures from Sea-Intelligence.
“Chinese manufacturing remains closed to a large degree, with opening dates continuing to be postponed,” Sea-Intelligence said. “This keeps export demand from China at extremely low levels, forcing mass-cancellations of sailings by the carriers.
“In very round numbers, we are experiencing a shortfall of some 300,000 teu-350,000 teu per week in the market. Again, in very round numbers, if this is at average rate levels of around $1000 per teu, it equals a revenue shortfall for the carriers of $300m-$350m per week.”
With the market already in its traditional weak period following the pre-Chinese New Year rush, analysts at Platts have warned carriers may face further pressure from falling rates on head haul voyages from China.
“This additional bearish factor is playing havoc with the delicately balanced container market, which has anticipated a significant fall in demand and has responded with a raft of void sailings in the market,” Platts said.
Despite this careful capacity management, the potential for ports to be closed and for more stringent lockdown procedures threatened a delayed return to the market, it added.
“With the ongoing virus, total exports from China are expected to fall significantly over the course of the quarter, with the date that Chinese industry comes back online being pushed ever further back,” Platts said.
“As a result, the number of void sailings in the market is expected to continue to grow in both scope and longevity, with an extended programme for void sailings to continue into mid-March.”
But with head haul voyages disrupted, Sea-Intelligence warned of disruptions and rising rates on the back haul in the weeks ahead.
“Shippers should therefore now prepare not only contingency plans for potential capacity issues, but also for significant price spikes,” it said.