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Firing blanks; backhaul shippers face price hikes and capacity shortages

In a flurry of capacity cutting activity the three major shipping alliances have slashed sailings as the extended Chinese New Year and coronavirus have depleted cargoes and shut down factories in China.

Danish maritime analysts Sea-Intelligence report that the rapid mass-cancellation of sailings is very likely to cause capacity shortages for back-haul shippers three-six weeks’ time, depending on where shippers are based.

“Back-haul shippers should therefore now prepare not only contingency plans for potential capacity issues, but also for significant price spikes,” said a Sea-Intelligence report. “In terms of operations, we should expect larger than normal delays in the sailing schedules, an effect which will be felt for several months as the delayed vessels work their way around their planned loops.”

Capacity issues could spread to other ports and countries, particularly in Viet Nam, where manufacturing plants have picked up some of the slack, which could lead to “capacity issues in secondary ports as well as an impact on feeder carrier rotations.”

Coronavirus blank sailings on the transpacific trade have reached 25, with carriers on the Asia-North America West Coast trade lane announcing 23 blank sailings.

“In total, roughly 231,100TEU, 210,800TEU on Asia-North America West Coast and 20,300TEU on Asia-North America East Coast, or 6% of the total capacity, are slated to be taken out of the Pacific trades in the analysed eight week period, according to data analysis from Sea-Intelligence.

In the Asia-Europe trade will see a similar pattern with 22 blank sailings, with 16 on Asia-North Europe and six on Asia-Mediterranean. In TEU terms, this translates into a total capacity withdrawal of roughly 364,800TEU, 276,900TEU on Asia-North Europe and 88,000TEU on the Asia-Mediterranean route, or 10% of the total capacity on the trade.

Figure A6 shows the Chinese New Year blanked capacity (solid red/yellow bars) and Coronavirus blanked capacity (shaded red bars) for each of the three carrier alliances, as a percentage of the total capacity offered by each alliance on the trade lan.e, across the eight weeks from week 05 to week 12

Cuts by the alliances are not, however, equal explains Sea-Intelligence, with THE Alliance only withdrawing capacity from one route, the Asia to US West Coast trade, out of the four major trade lanes as a result of the coronavirus.

“Even then, they are slated to blank a lower amount compared to 2M and Ocean Alliance on that trade lane,” said Sea-Intelligence, adding that in all four major trade lanes, “2M has announced blank sailings equalling roughly 269,200TEU, which translates into 12% of their total capacity. Ocean Alliance is slated to blank 272,300TEU or 10% of its total capacity. THE Alliance will only blank 2% of its total capacity, which equates to 41,200TEU, all to be blanked on Asia-North America West Coast route.”

On 7 February Sea-Intelligence reported that exports from China had been slashed by up to 350,000TEU per week, costing the industry around US$350 million every week.

Nick Savvides
Managing Editor

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