Container shipping: Big problems due to Corona virus

The Sea-Intelligence Sunday Spotlight has just been published – 2 days earlier than usual in order to provide a timely update on a rapidly developing situation.

The continued shut-down of businesses in China is causing a massive shortfall of demand, resulting in carriers now blanking a large number of services. Given the shortfall in demand, they essentially have no choice. We are now at a point where the carriers in the past two weeks have blanked 31 additional services across Transpacific and Asia-Europe – and this is above and beyond what was already blanked seasonally for Chinese New Year. This is the removal of almost 350.000 TEU of capacity – again above and beyond what had already been removed due to Chinese New Year.

This will not only have an impact right now on all Asian exporters as the networks are being disrupted. Companies who ship goods to Asia need already now to prepare themselves for potential capacity problems in 3-6 weeks’ time depending on geography, as well as potential price spikes as a consequence. This might be a situation not too dissimilar from what we saw in 2017 where large-scale network changes caused temporary capacity issues from Europe to Asia and saw the backhaul rates briefly increase to levels exceeding the headhaul rates.

Lars Jensen
Leading expert in the container shipping industry