Carriers see improved situation in China after February dip but fear further disruption from Coronavirus

The coronavirus outbreak in China and subsequent reduction in trade flows has led to significant losses for carriers. According to some estimates the bigger carriers could have lost up to 350 million USD per week. Smaller carriers focusing on Chinese business have significant cash flow issues and some shipping lines have had to sell ships to shore up liquidity. 

Carriers have reacted by reducing sailing lines and reducing capacity with rate increases as a logical consequence. 

March 2020 Container Situation:

Shanghai – Coronavirus-led void sailings have slowed following the recovery of China’s factory and logistics activities. But the spread of the disease in other countries has raised concerns about a further disruption to container shipping demand.

Carriers have cancelled 77 sailing lines on Asia-Europe and transpacific trades as of the end of last week, up from 70 a week ago, according to estimates by Sea-Intelligence. 

A rebound is expected in Chinese exports with carriers warning of bottle necks in April, as suppliers in China get back to full production capacity and try to recoup orders, a rebound is expected in Chinese exports with probably capacity issues in April. 

The world’s fourth largest container shipping company said on Friday that it should return to normal fleet capacity in China by mid-March. There have been signs of recovery in industrial production since the end of February, he added.

Market leader Maersk warned last month that the epidemic would weigh on 2020 earnings and analysts warned of a sharp decline in global growth, or even the recession.

But Michel Sirat, Chief Financial Officer of CMA CGM, said that the restocking by companies and the increases in freight rates announced by the container lines will support a rebound in the second quarter of shipments.“We will have to see if the long-term effects of coronavirus could have a more structural impact. At the moment we don’t think that’s the case, so we are confident for 2020, “said Sirat.

Other carriers are less confident pointing to problems appearing in new regions where the virus is spreading. The anticipated recovery in cargo demand might fall through if the infection in the western economies could not be contained effectively and hence hurt consumption.

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