Virus outbreak could lower container growth with six million TEU

The coronavirus outbreak could impact container growth in 2020, projects Alphaliner. The outbreak is starting to "have a substantial impact on the maritime industry." HMM sees concerns of a short-term drop in trade volumes.
Photo: Aly Song/Reuters/Ritzau Scanpix
Photo: Aly Song/Reuters/Ritzau Scanpix

The outbreak of coronavirus in recent weeks could have consequences for the container market in 2020.

According to analyst firm Alphaliner, the virus outbreak means that growth in containers handled goes down 0.7 percent this year compared to previous expectations.

Reasons such as an extension of the Chinese New Year and an "ad hoc emergency measure" to reduce spread of the virus factors into the analyst firm's assessment. In Chinese ports, including Hong Kong, the analyst firm expects to see volumes drop by more than 6 million teu.

"(...) data collected on weekly container vessel calls at key Chinese ports already shows a reduction of over 20 percent since 20 January," reports Alphaliner, though adding that the full effect the virus outbreak has had on volumes will not be fully measurable until the ports publish their numbers for the first quarter.

Void sailings

In a comment to ShippingWatch, Korea's HMM says that a short-term impact can be expected:

"It is expected that there will be concerns of a short-term drop in trade volume due to the delayed return of workers, the temporary suspension of production facilities and the delayed normalization of the supply chain following the extension of the Chinese New Year holiday. However, as for the long-term impact, it appears too early to predict and we should wait and see."

Several shipping companies have reacted by further voiding sailings in February, which has lowered volumes.

The trend in long-distance transport is expected to continue until mid-March, which could have a negative impact on the recovery of cargo volumes even after the Chinese New Year.

"Carriers nevertheless continue normal cargo loading and unloading at all Chinese ports, except at the river port of Wuhan, where operations have been suspended since the city was locked down by the Chinese government on 23 January," writes Alphaliner.

The port in Wuhan handled 1.7 million teu in 2019, which accounts for 0.6 percent of the combined volumes going through Chinese ports.

"Substantial impact on the maritime industry"

The coronavirus outbreak originates in Wuhan, China. In recent weeks, the virus has spread to several countries around the world, while China, among other places, has shut down cities and has extended the Chinese New Year in an effort to keep people at home.

Latest reports indicate that more than 490 people have died from the virus, according to Reuters.

The virus is not only impacting container throughput in the maritime industry, adds Alphaliner.

"(...) the Wuhan coronavirus outbreak, which led to a spreading of the infectious disease into other parts of China, starts to have a substantial impact on the maritime industry," writes the firm.

The industrial production is hit, and this impacts export volumes, while canceled flights to the country cause problems for crew changes, and Alphaliner also points to severe staff "shortages" at many of China's busiest yards.

"Shipyards in the cities and provinces of Shanghai, Zhejiang, Jiangsu, Guangdong, Fujiang and Anhui will only open from 10 February, rather than on 3 February as originally planned," writes Alphaliner:

"This will not only affect deliveries of vessel newbuildings, but it will contribute to the chaos that the current scrubber-retrofit frenzy has caused."

English Edit: Daniel Logan Berg-Munch

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