Affected by the new coronavirus epidemic, the shipping industry has been severely hit, and under the impact of the “May Day holiday”, it is further under pressure! It can be said to be adding insult to injury!
Sea Intelligence, a well-known shipping consultancy, believes that China’s May Day holiday has intensified the reduction in shipping demand, making Currently, the number of shipping companies suspending sailings has reached its peak. The latest research report also shows that in the past week alone, the number of sailing suspensions has soared by 400%. Affected by the COVID-19 epidemic, as of late April, companies had announced 435 sailing suspensions, equivalent to a drop in demand of 7 million TEU.
The report shows that failure to prevent the decline in freight rates may cause the liner shipping industry to lose US$23.4 billion in 2020.
Because the epidemic coincides with China’s May Day holiday, it is expected that up to 3 million TEUs of shipping capacity will be suspended in the next few weeks! The container industry is facing its worst capacity crisis ever.
On April 29, Orient Overseas announced the suspension plan for the trans-Pacific route and the Indian Subcontinent Express from May to June; although the suspension data disclosed by major shipping companies around the world through the media is about 30%, it is understood that according to the current Based on the suspension arrangements and planning, the actual suspended shipping capacity may rise to 40%-50%. In other words, the container liner company is about to enter a semi-suspension state (capacity or fleet)!
Taking the trans-Pacific region as an example, the three major alliances each suspended approximately 17%-24% of their shipping capacity in weeks 15-21. However, in weeks 22-27, the suspension rates of 2M and THE Alliance were 19%-21%.
OCEAN Allianc also announced three Asia-North Europe blank sailings in May, canceling the remaining two FAL7/NEU3 sailings and the FAL8/NEU7 route on May 17. It is expected to be announced in the second quarter More suspensions.
According to Sea Intelligence, with the arrival of the May Day holiday, more sailings have been canceled or adjusted according to the suspension plans announced by major companies——
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In the 19th week, the empty sailing of ships on the Asia-North Europe trade route will reach its peak, with about 38% of routes canceled.
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In Week 20, about 33% of routes from the Mediterranean to the East Coast of North America will be cancelled;
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And Asia -On the east coast of South America, 59% of sailings will be cancelled.
“On the Asia-Northern Europe route, the number of canceled voyages has reached 20% for 7 consecutive weeks. Three of those weeks were above 35%,” said Alan Murphy, CEO of SeaIntel Intelligence.
Regarding the recent large-scale suspension or empty sailing, industry insiders are worried that it will trigger an imbalance in the available container capacity of ports in June. Next, some ports are likely to face a situation where the total export cargo exceeds the total container capacity available on the market. In this case, shipping companies will have to deploy ships to evacuate or mobilize containers.
A shipping company said that with the current large-scale suspension or empty sailing, what they are most worried about is that “a container will be hard to find” in May. If ships start to compete for containers at all costs, , in order to avoid empty sailing when ships return, they may have to pay the price of lowering freight rates. By then, everyone will see the collapse of freight rates…
The measures taken around the world to curb the spread of the epidemic have had a huge impact on the economy. , the International Monetary Fund (IMF) sounded the recession alarm, saying that the consequences of the Great Blockade could be worse than the Great Depression. Some recovery is expected in 2021, but demand growth will be limited.
