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Coronavirus triggers spate of void sailings as demand dives

CONTAINER shipping lines and freight forwarders are keeping business operations to a minimum through at least the first week of February as China's major coastal provinces extend the Lunar New Year holiday in a bid to curb the spread of the coronavirus

05 February 2020 - 19:00

CONTAINER shipping lines and freight forwarders are keeping business operations to a minimum through at least the first week of February as China's major coastal provinces extend the Lunar New Year holiday in a bid to curb the spread of the coronavirus.

This slowdown in freight activity is having a ripple effect, prompting major ocean liners to shelve sailings during the period, and beyond.



According to the World Health Organization (WHO), people living and working in Wuhan, China face a 'very high' risk of contracting the disease, reported New York's FreightWaves.



Part of China's approach to limiting further cases is extending the Lunar New Year factory shutdown until February 9 in at least 14 cities and provinces. Seven of those are along China's coast. They include Guangdong, Fujian, Zhejiang, Shanghai, Jiangsu, Shandong and Hebei.



Despite the extended holiday, carrier Hapag-Lloyd said marine terminal operations in China are continuing as normal. The inland Hubei province, in which the city of Wuhan is the epicentre of the outbreak, is the exception, with barging operations to the coast shut down.



Global transportation and logistics companies with local offices are responding by extending office closures, as well as shuttering some operations. Hapag-Lloyd said offices in the affected coastal provinces will remain closed in line with the official holiday extension. Further, employees are being urged to use video and telephone conferences to limit exposure to the illness.



Maersk said most of its operations remain normal, with the exception of complete closures in Wuhan. Its coastal offices will remain closed in line with the Lunar New Year extension.



Maersk said as a result of the lower demand, it will scrap two Asia-Europe sailings. They are scheduled to sail over the next two weeks, amounting to 26,000 TEU in capacity.



Ocean Alliance is set to cancel three Asia-Europe sailings over the next three weeks due to the coronavirus, according to UK-based container research firm PR News Service. Those include the 13,380-TEU CMA CGM Laperouse, the 20,160-TEU Ever Globe, and the 14,074-TEU CSCL Saturn.



Freight forwarders are taking similar precautions. DHL Global Logistics has suspended all operations in the Wuhan epicentre. The world's largest ocean forwarder, Kuehne + Nagel, said its local offices will open in line with the extended Lunar New Year schedule.



Employees of the Ningbo Shipping Exchange, a provider of container rate indices in Zhejiang province, are working from home.



Container lines had already cancelled a number of Asia-Europe sailings in response to the expected slowdown, helping keep container freight rates firm. The Drewry World Container Index for Shanghai-Rotterdam was down 10 per cent at the end of January from its early 2020 peak while the Shanghai-Genoa rate remains largely flat.



The coronavirus outbreak means an even 'more sluggish recovery' in container freight pricing, on top of the usual Lunar New Year slowdown, according to Platts Global Container Weekly Commentary. But the extension of the Lunar New Year holiday means Chinese manufacturers will restart operations later than previously expected. This suggests even more cancellations may be in the offing.



'Typically, demand does not return for ex-Asia front hauls until the start of March, but the latest developments point to an even longer recovery time,' Platts said. While the cancelled sailings are one step to dealing with the lower demand, 'should there be further delays in the recovery of Chinese manufacturing, these measures may not prove enough.'


WORLD SHIPPING

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