Friday, February 28, 2020

Shipping: The Revenue Loss From Cancelled Sailings Alone Is Approaching $1 Billion Per Month

That's not counting less-than-capacity trips and other hits to the top line.
From World Maritime News:

105 Sailings from Asia to North America and Europe Blanked in February
Ocean carriers canceled about 105 sailings on the routes from Asia to the North America and Europe/Mediterranean regions alone in February 2020, according to the data from the UK-based consultancy Drewry.

Carriers are blanking sailings as a way of dealing with the cargo volume slump caused by the coronavirus outbreak originating from China and the closure of manufacturing plans in the country as a precautionary measure.

All of the Chinese ports, apart from Wuhan, have remained open. However, they are not operating at full capacity with staff shortages arising from travel restrictions and quarantine measures.
Extended factory shutdowns have also limited movement of cargoes destined for those ports and when monthly port throughput data is finally released, Drewry predicts there will be a significant shortfall.
“The cancellation of 105 sailings per month represent a shortfall in revenue of roughly USD 1 billion (105 x 10,000 TEU x USD 1,000), of which a portion will be made up later via full ships and extra loaders, but the short term damage to carrier profits is large,” Drewry commented.
Chinese port operators indicate that volumes were down by 20-40% in the three weeks from January 20 to February 10, 2020.
Non-Chinese ports have not reported falling throughput volumes, however, the impact is expected to become visible in the next few weeks, when ships from Asia fail to arrive with containers from China, Drewry said.

As explained, a 30% fall in container volumes in China, which accounts for 30% of global throughout, means a 30% x 30% = 9% reduction in global container volume, unless the shortfall is caught up later.
Even though it is still difficult to estimate the impact of the outbreak on container trade, Drewry believes there will be at least 2 months of global port volume falls.

“Cargo owners and shipping lines are desperate for a swift resolution that will see Chinese factories resume production and start churning out the goods and parts that grease the global supply chain. It is inevitable that world port throughput will suffer a large contraction in 1Q20, but the question is now whether we can expect a v-shaped recovery later this year or something else entirely?” Drewry said....
 ....MORE

Previously:
Shipping: Coronavirus Costing Industry $350 Million/Week