International shipping lines are set to lose around $1.7bn in revenue following the impact of COVID-19 disease popularly know as Coronavirus on international shipping. This is even as findings revealed that Maersk Line could face the worst revenue downfall since China represents 30 per cent of its annual shipping volume.
According to Sea-Intelligence, an analysis company based in Copenhagen, the impact of the coronavirus outbreak on the shipping industry is continuing to increase in scope, and the ripple effects are continuing to show up.
Sea-Intelligence, in its weekly report, stated that “In the 10-week-period, comprising of the Chinese New Year and the ongoing coronavirus outbreak, the shipping industry is being faced with a downfall of some 1.7 million TEU (twenty-foot equivalent unit is the inexact unit of a container), roughly 1.7 billion U.S. dollars in revenues for the carriers.”
For the Copenhagen-based company, this TEU loss represents one per cent of the total global volume in 2019, meaning that the “coronavirus is thus far on track to reduce global container growth in 2020 by one percentage point.”
ALSO READ: APC nominates Chukwuma to replace Moghalu as National Auditor
“The hope is that the situation will be brought under control in the near future and that we will get a V-shaped recovery,” the report said, noting that it is possible for the shipping companies to catch up on some of the 1.7 million TEU.
But even in this case, because many containers were exported out of China and there were so many blank sailings, it “will be a challenge for carriers to repatriate them quickly enough to meet a sudden post-virus surge out of China.”
According to ship-technology.com, the number of port calls at Shanghai and Yangshang declined by 17 per cent in January, compared to the same period in the previous year.
Danish shipping company Maersk Line is expected to face the biggest impact since China represents 30 per cent of its annual shipping volume. Hapag Lloyd can also face a weak first quarter because China operations account for 25 per cent of the group’s total revenue.
Since the Chinese New Year is the biggest holiday in China’s calendar, shipping and logistics companies already expected a higher number of blank sailings (cancellations by the carrier), but those estimates were elevated due to the epidemic.
The largest capacity reduction was registered in Asia to North Europe lane, where 11 per cent of the capacity was blanked since the Chinese New Year. When considering the holiday’s blanks, 29.5 per cent of the capacity was removed from the trade, in over 10 weeks.
In the Transpacific trade to the North American West Coast, 10 per cent of the sailings were blanked due to the virus, bringing the total level of blanked capacity to 24.1 per cent.
In the 10-week-period, during which the coronavirus has affected every sector in the industrial chain, the Transpacific trade to the West Coast now “equals 74 per cent of the normal Chinese New Year removal.” In the Asia-Mediterranean lane, the impact is 71 per cent.
and then