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Coronavirus crisis takes a $2.3B toll on shipping volumes and freight rates

The air and sea global freight industry are confirming that a “return to the norm” is months away, some have suggested September or longer until both a full return to productive work and sufficient supply chains are in place. 

The world’s biggest container ship operator says the impacts from the coronavirus will send its company to an unexpected fourth-quarter loss.

Lars Jense, from SeaIntelligence in Copenhagen said the loss of traffic was running at 300,000 containers a week.

“This would cause a logistical crunch in Europe in early March even if the epidemic is brought under control quickly,” Lars said.

A.P. Moeller-Maersk A/S said on Thursday that it has canceled dozens of sailings out of China since late January due to factories extending its shut down period over the Lunar New Year holiday.

Soren Skou, Maersk Chief Executive said in an interview that the company has struggled to resume production and quarantines and travel restrictions aimed at containing the spread of the virus have had “a huge impact” on China’s export volumes.

“It’s also hurting import volumes with not enough truck drivers to move things around,” he said.

The World Health Organisation declared the disease as a global health emergency, that has claimed the lives of more than 2,600 people globally, the vast majority in China.

Shipping data group Alphaliner said in a report this week that carriers had pulled a total of 1.67 million containers of capacity from China services since the start of the Lunar New Year holiday.

An updated “return to work” date was implemented on Monday February 24 in China.

Container lines have lost a total of $2.3 billion (US$1.5 billion) in business since then, the report said.

The Wall Street Journal reported that Maersk, which is seen as a barometer of global trade, reported a revenue fall of 5.6% to $9.67 billion, missing expectations of $9.94 billion, as its shipping unit lowered capacity to adjust to market conditions.

“Maersk, which is seen as a barometer of global trade, reported a revenue fall of 5.6% to $9.67 billion, missing expectations of $9.94 billion, as its shipping unit lowered capacity to adjust to market conditions,” The Wall Street Journal reported.

The Freight and Trade Alliance (FTA) said there is of course also a global supply chain / economic issue happening at the same time that has been fueled by the fact that this outbreak has come on top of the Lunar New Year.

“Factories that are staffed, in many cases, do not have a full roll call and quite possibly do not have the raw materials to commence manufacture,” The update sent to members of the FTA said on Friday.

Transport companies are short of staff thereby creating a lack of trucks to transport goods that are available. 

“Ports are congested, reefer plugs in many ports are full and containers are being diverted to other ports to remain on power and surcharges have been applied by some shipping lines to cover these costs,” FTA said.

Companies globally are trying to source goods from other parts of the world and those suppliers will not be able to fully address all requests so shelf stocks will slowly start to reduce. 

The Daily Telegraph reported that refrigerated ships full of frozen food (reefers) are unable to enter Chinese ports because the berths are taken and they cannot tap into electricity chargers. Meat supplies are spoiling at sea.

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