Update: COVID-19 effect on container shipping
by Chris Rozon, on Mar 11, 2020 10:50:19 AM
The COVID-19 epidemic is putting enormous strain on global trading networks. All modes of transport are suffering near-record-setting losses as they deal with the fallout of factory closures and travel bans.
Container shipping is being hit particularly hard. The American Association of Port Authorities (AAPA) projects cargo volumes at U.S. ports in the first quarter could be down by 20% or more from 2019 levels. Industry sources are estimating that container ship operators are losing between $300 million and $350 million per week.
We have already seen almost 200 blank sailings from Asia to North America and Europe. The Port of Baltimore shut down for 2 days and is now working on reduced hours. The Port of Los Angeles alone has lost 40 sailings, or 25% of their normal first quarter traffic. The port has already cancelled 25 work shifts, and most terminals have run out of room to store empty containers and are refusing to in-gate any. The situation is so dire that Mediterranean Shipping Company (MSC) is planning a series of calls with 19,000 teu vessels dedicated entirely to repositioning empties back to China.
Harvard Business Review reported glum stats last week that show part of the reason why: The world’s largest 1000 companies own over 12,000 facilities - factories, warehouses, and other operations - in COVID19 quarantined areas across China, South Korea, Italy, etc.
In China, outside of the quarantined zones, the situation appears to be ameliorating slowly. Factories are re-opening, although capacity still remains under 80% for most. Ports and trucking networks are mostly up and running again, although close to the center of the epidemic only at very reduced levels. In the quarantined zones in China, our colleagues report that some factories are projecting to be shuttered for the next several months.
At TradeLanes, we have fielded an unprecedented number of calls these weeks from exporters - whose teams are in chaos - recognizing the need to get better processes and systems in place to help manage changes and disruptions more efficiently and effectively.
How is your business weathering? We’d love to learn more. You can reach me at firstname.lastname@example.org.
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