Containership tonnage provides face the prospect of weaker future employment prospects due to the coronavirus, Fearnleys Securities has warned.
“With at least 24 provinces in China representing over 80% of GDP and 90% of total exports extending the Chinese New Year, we are bound to see a significant impact on container volumes in the coming weeks and months,” said analysts Espen Landmark Fjermestad and Peder Nicolai Jarlsby.
“Typically, cargo is transported by road, rail and river into Wuhan, consolidated and then shipped to Shanghai, the world’s largest container port.”
The two analysts said there has already been “gaps in the supply chain of automotive parts and electronics”, and they expect carriers to respond by “significant blank sailings in the short-term”.
“Already, long haul services are voided through mid-March,” said Fjermestad and Jarlsby.
According to Alphaliner, the virus will reduce cargo volumes at Chinese ports by over 6 million-teu in the first quarter of 2020.
“With China having seven of the 10 largest ports, this will also impact global throughput numbers with an estimated 0.7% for 2020,” the analysts said.
“With an already fragile market balance (2-3% growth expectations for 2020) and a gross delivery schedule of 5%, this could weigh heavy on both spot rates and contract renewals going forward,” they said.
“Moreover, we are likely to see further increase in the idle fleet as liners redeliver any unwanted capacity.”
As a result, Fjermestad and Jarlsby said they remain underweight on liner companies and “very selective” on leasers with their only selections Global Ship Lease due to its backlog and MPC Containerships (MPCC) due to their “cost competitiveness”.
Separately, OOCL said most container terminals in China were "operating normally", but said some terminals such as those in Shanghai, Tianjin, and Ningbo there have been challenges in handling the flow of reefer containers due to the huge demand for reefer sockets on shore.
The Hong Kong liner operator said it was “working very closely” with its customers if recovery action is required to minimize any potential impact to their reefer shipments.
Danish analyst Sea-Intelligence has claimed that the coronavirus outbreak is costing container lines $350m per week due to lost volumes.
It said 350,000 teu has been cut from the export and import market every seven days since the disease broke out.
