Carriers are managing to avert financial crisis by maintaining rates as capacity management and shortages of equipment are forcing shippers to fight for space in the face of growing concerns for the global supply chain.
Denmark-based Sea-Intelligence issued a warning that carrier losses through the spread of the Coronavirus have now reached US$1.9 billion as the cancellation of sailings and events, such as the TPM conference in Long Beach are evidence of the spread of the virus and the mounting anxiety around the globe.
Sea-Intelligence adds that the disruption caused by the virus has caused problems with “round-trip dynamics,” with both vessel and equipment shortages.
“Carriers are already pushing rate increases on account of this, and for some back-haul shippers the coming weeks might well be a matter of whether they can get their cargo moved at all, almost irrespective of the price they are willing to pay.”
The consultancy adds that, “Through proactive capacity management, carriers have managed to maintain freight rates, and at least for now, stave-off a feared financial-crisis-like rate implosion.”
Calculating the losses through a rough average of US$1,000/TEU Sunday Spotlight, published by Sea-Intelligence, showed that there had been 111 blanked services in weeks 5-15 of this year, 48 of those were due to COVID-19 on the Pacific trades alone, while a further 75 sailings were lost on the Asia to Europe trades, 29 through the virus. The remaining blanked sailings were due to Chinese New Year.
More positively, Sea-Intelligence reports, “We appear to be seeing a stabilisation. Even though the carriers have announced seven more blank sailings over the past week, which corresponds to an additional 7% removal of capacity, the pace of new blank sailings has clearly declined, suggesting a belief from the carriers that volumes will slowly be brought back to normal levels.”
