Shipping executives are saying that container ships are leaving Chinese ports as little as 10 per cent full, and sailings are being cancelled as carriers are bracing for a financial retreat.
Shipping volumes out of China are plummeting as the impact of the coronavirus outbreak takes a deeper toll on industrial production, and ocean carriers are bracing for financial blows from the diminished output. According to the Wall Street Journal, the cost in lost volumes to container shipping lines is reaching $350m a week.
The cancelled trips will delay or reduce shipments worldwide, where retailers may see a slowdown in their traditional restocking of inventories for the spring. Five European and Asian container ship operators told the WSJ they are preparing profit warnings for the first half of the full year.
Sea-Intelligence said in a report last week that more than 350,000 containers have been removed from global trade since the outbreak of the virus led China to impose large travel restrictions at the end of the country’s Lunar New Year holiday break.
Ships arriving in Chinese ports are finding a shortage or power plugs for refrigerated containers that move fresh produce because there are no workers at terminals, as people avoid potential contamination by the coronavirus.
Some cargo has been diverted from several mainland ports to Hong Kong, which some carriers and shippers are now using as an alternative entry point for goods that are then trucked into China.
South Korean smartphone manufacturer Samsung has been forced to adapt as China’s manufacturing and logistics sectors are disrupted, by shipping components to neighbouring Vietnam for assembly.
Apple has similar issues, with some of its suppliers being based in Wuhan, the epicentre of the outbreak, and is developing plans to minimise disruptions to supply.
Brokers have stated that crude and natural gas shipments are down by nearly 50 per cent across China’s main ports. The daily freight rates for crude tankers have fallen from $80,000 at the new year, to between $10,000 and $40,000.
Norway-based BW Energy, which operates the world’s biggest fleet of gas carriers that move products like propane, this week cut its projected valuation for an initial public offering at the Oslo Exchange from $$700 million to $500 million.
“The offering period has coincided with significant volatility in the global financial markets due to the outbreak of the coronavirus in China, which has also triggered a material downward movement in the oil price,” the company said.
The China Association of the National Shipbuilding Industry said more than 200 deliveries of ships under repairs or retrofitting could be pushed back. China is the world’s biggest shipbuilder, with more than 960 vessels set to be delivered this year, according to data provider VesselsValue.
“The Chinese players are facing significant challenges in fulfilling their contracts because they are not able to operate at full capacity after the Lunar New Year holiday,” the shipbuilding group said.
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