Container lines lose $350m weekly to coronavirus

Container lines lose $350m weekly to coronavirus


Container lines are taking an estimated revenue hit of about $350 million weekly as they blank sailings due to the impact coronavirus in China, according to analysts Sea-Intelligence.

In its weekly newsletter Sea-Intelligence highlighted that with the extended closure of Chinese factories extremely low levels of exports were forcing the mass cancellation of sailings.

According to the analyst in a “very short period of time” lines had blanked an additional 31 sailings on the transpacific and Asia – Europe trades due to the coronavirus, on top of existing cancelled voyages over the lull of Chinese New Year.

On the transpacific some 21 sailings had been blanked equating to 198,500 TEU of capacity, these came in addition to 61 voyages cancelled over Chinese New Year.

On the Asia–Europe trade, where larger vessels are deployed, 10 additional sailings were blanked taking out some 151,000 TEU of capacity. Lines had already blanked 51 sailings over the holiday period on the Asia – North Europe/Med trade.

In real terms for container lines this will equate to a substantial hit on revenues. “In very round numbers, we are experiencing a shortfall of some 300,000 – 350,000 TEU per week in the market. Again, in very round numbers, if this is at average rate levels of around $1,000 per TEU it equals a revenue shortfall for the carriers of $300-350 millin per week,” Sea-Intelligence said.

For shippers using backhaul trades the result could be the shortage of capacity in the weeks to come and also therefore increased rates.

“The rapid mass-cancellation of additional sailings have a high likelihood of causing capacity shortages for back-haul shippers 3-6 weeks into the future, depending on geography. Back-haul shippers should therefore now prepare not only contingency plans for potential capacity issues, but also for significant price spikes,” the report said