Maersk and MSC blank Asia – Europe/Med sailings as demand slumps

Just as container lines schedules from China seemed to be getting back to normal the 2M Alliance has blanked two Asia – Europe/Med sailings next week as the impact of the COVID-19 pandemic starts to hit demand in western nations.

2M Alliance members Maersk and MSC announced they would be blanking the AE1/Shogun Asia – Europe service next week and the AE20/Dragon Asia – Mediterranean service. The services are being blanked in response to falling demand due to the spread of the COVID-19 pandemic in Europe which has resulted in widespread lockdowns.

Commenting on the AE1 service in a customer advisory Maersk said: “In relation to the COVID-19 effect in Europe, we have seen a further reduction in demand. Consequently, there will be a blank sailing of the AE1 service departing from Far East Asia in week 14 and returning from North Europe in week 19.”

Sea Intelligence ceo Lars Jensen commented on Linkedin: “It is a capacity reduction of 13% to North Europe and 22% to the Med for the week. Normally blank sailings are announced with 3-4 weeks of notice, but these are not normal times.”

The move comes as container lines schedules were returning to normal following an unprecedented number of blanked sailings on their core Asia – Europe and transpacific services at the height of the COVID-19 outbreak in China.

David Jordan, regional director, Asia for Maritime Strategies International, said on a Seatrade Maritime News Webinar yesterday: “Liner companies have resorted to a significant programme of blanked sailings: over 50% of all sailings on core routes in order to support freight rates.”

More blanked sailings are expected to follow and yesterday we reported that while Chinese port container throughput figures are currently improving after the COVID-19 outbreak has brought under control the China Port & Harbor Association is forecasting a 5 – 10% drop in volumes in Q2 as result of lower demand internationally due to the pandemic.

A similar picture was painted by Hapag-Lloyd ceo Habben Jansen in a COVID-19 message. “In terms of trade, we see that many ports in China have returned to normal operations, and that scheduled sailings and bookings ex-China are gradually increasing,” he said.

“So far the crisis has had only limited impact on our business, but we expect a significant effect of the virus on global container traffic in the months to come, and if this happens we will have to make some adjustments to the network.”

 Hapag-Lloyd Adds 100,000 TEU of Capacity to Keep Goods Moving

German container shipping giant Hapag-Lloyd has on-hired over 100,000 TEU of additional equipment across the globe to keep the supply chain flowing amid the ongoing coronavirus crisis. 

According to the carrier, many ports in China have so far returned to normal operations, and scheduled sailings and bookings ex-China are gradually increasing.

As explained, the company is doing ‘everything in its power’ to maintain uninterrupted service, with no significant disruptions to work productivity or customer service.

“Our vessels are today operating as usual and our service structure is largely unchanged,” Rolf Habben Jansen, Hapag-Lloyd’s CEO said in a COVID-19 update.

To help prevent the disease from spreading, the company has introduced a number of measures for its onshore and offshore employees. This includes additional safety measures being implemented onboard Hapag-Lloyd’s boxships. Moreover, the company’s crews are currently not changing ships in high-risk areas.

“So far the crisis has had only limited impact on our business, but we expect a significant effect of the virus on global container traffic in the months to come, and if this happens we will have to make some adjustments to the network,” Jansen noted.

In 2019, Hapag-Lloyd managed to significantly improve its profitability and reduce debt more than planned. The company has now taken additional precautionary financial measures to assure that even if the crisis persists longer than expected, Hapag-Lloyd will be able to offer the required services and products.

“Over the coming weeks, we will continue to navigate these unchartered waters and move as close as possible to ‘business as usual,'” Hapag-Lloyd CEO further said.

Hapag-Lloyd currently has a fleet of 239 containerships with a total transport capacity of 1.7 million TEU. In addition, the company has a container capacity of about 2.5 million TEU.

HMM puts $25 M into THE Alliance ‘Contingency Fund’

The partner carriers of THE Alliance have increased total contributions to their 'Contingency Fund', a cash reserve to be used in case of

a member shipping line insolvency, from $50 M to $75 M.

The extra money was deposited by HMM which will be joining the alliance from 1 April.

HMM’s $25 M contribution will be the largest among the four THEA

partners, with other members’ shares slightly revised as follows:

ONE : $23.298 M (from $23.684 M),

Hapag-Lloyd : $16.253 M (from $15.886 M)

Yang Ming : $10.449 M (from $10.430 M)

The amount of contingency contribution is reviewed by THE Alliance’s member lines each year, starting on 1 April.

Chinese port container volumes decline 10.6% in Jan-Feb this year

China’s Ministry of Transport released port throughput figures for the period of Jan-Feb this year, showing a decline several major ports, especially in terms of container volumes.

During the first two months of this year, China’s cargo throughput is 1.87bn tons, and container throughput was 34.48m teu, a decline of 6% and 10.6% year-on-year respectively.

The top ten container throughput ports are Shanghai port (5.9m teu, a decline of 10.7%), Ningbo-Zhoushan port (4.06m teu, a decline of 10.7%), Shenzhen port (3.5m teu, a decline of 12.8%), Qingdao port (3.17m teu, a decline of 1.4%), Guangzhou port (2.85m teu, a decline of 13.7%), Tianjin port (2.28m teu, a decline of 3.9%), Xiamen port (1.56m teu, a decline of 8%), Dalian port (1.06m teu, a decline of 24%), Suzhou port (790,000 teus, a decline of 23.9%,), Lianyugang port (770,000teu, a decline of 2.2%), all the major ports posted container volume decline for the first two months.

The top ten cargo throughput ports are Ningbo-Zhoushan port (163.31m tons, a decline of 1.8%), Tangshan port (96.19m tons, a decline of 10.1%), Qingdao port (92.68m tons, an increase of 1.7%), Shanghai port (88.12m tons, a decline of 14.7%), Guangzhou port (82.23m tons, a decline of 6.6%), Rizhao port (78.97m tons, an increase of 4.6%), Suzhou port (74.63m tons, a decline of 11.9% inland port), Tianjin port (72.08m tons, an increase of 8%), Yantai port (61.49m tons, a decline of 1.8%), Dalian port (56.04m tons, an increase of 4.2%).

Due to the COVID-19 outbreak Chinese ports have faced severe challenges and a decline of the cargo throughput since the beginning of this year. After successful prevention and control of the outbreak, China has been promoting the work and production resumption from March, however, the increasing imported infection is another risk for transportation sector.

Port Authority of New York and New Jersey seeks $1.9bn bailout amid COVID-19

The Port Authority of New York and New Jersey (PANYNJ) is seeking a $1.9bn government bailout as traffic plummets amid the coronavirus (COVID-19) outbreak.

In a letter to the congressional delegation of New York and New Jersey, PANYNJ executive director Rick Cotton and chairman Kevin O’Toole said the port authority is facing “precipitous drops in passenger and cargo volumes”.

The tenants have also requested fiscal relief from rents and charges as their industries contract under the strain of the pandemic.

They project the cost of this pandemic will be $1.9bn assuming the current declines continue for six months.

PANYNJ manages one of US busiest airport system, coastal ports, bridges and tunnels to and from New York City, and ridership has plunged as people avoided travel coupled with an increased cost of disinfecting those services.

Cargo volumes at the region’s ports are expected to drop by 30% this month compared to year-ago level.

“The bi-state region produces nearly 15% of the entire US GDP,” the letter stated, “and the nation will need the region to fully rebound from the current crisis.”

The Democratic governors of New York, New Jersey, Connecticut and Pennsylvania have warned that their transportation systems are seeing ridership “decimated”, and they believe assistance would need to top $100bn or more for the four states alone in order to counter the impact of COVID-19.

Container shipping faces 17m teu demand impact from coronavirus

As the coronavirus (COVID-19) sweeps across Europe and the US causing widespread disruption and lockdowns container shipping could see a loss of 17m teu of cargo in 2020.

Analyst Sea-Intelligence said in its latest newsletter that container shipping could be looking at developments similar to the globally financial crisis in 2009 which implies a volume loss of 10% or around 17m teu in 2020.

The analyst warned that as a result there was a “realistic risk of bankruptcies”.

“The real underlying problem is the impact this will have in the longer term in 2020 and possibly beyond, on not only consumer spending but also on the willingness of companies to order goods in the first place – as well as their ability to do so, as we are also seeing a possible financial liquidity problem begin to appear,” Alan Murphy ceo of Sea-Intelligence said.

The analyst noted two positives for container shipping. One was the collapse in the price which sees lines getting a short term cash boost from bunker surcharges implemented on the basis of fuel prices in January, while paying much less for fuel now. The second positives was the discipline which carriers had shown in blanking sailings when the coronavirus was at its height in China and consequently did not dump freight rates.

“This means that until now rates have been relatively stable despite the coronavirus impact from China and might well also be through the coming period if we see a new raft of blank sailings,” Murphy said.

Italian Ports Maintaining Regular Operations despite COVID-19

Italian ports are fully operational despite the impact of the coronavirus pandemic in the country which has taken claimed the lives of 5,476 people, making Italy the worst-hit country by the pandemic.

“The Italian Port Association wishes to clarify that operations in ports are carried out with adequate measures,” a letter from the association, shared by BIMCO, reads.

“Ports are, therefore, fully operational with all their regular services guaranteeing complete functionality of all those offices dedicated to control and verification (i.e. Port Authority, Customs, Harbour Master, Health department offices and so on).”

The association said that restrictions enforced by the Italian Government are referred only to the cruise sector.

Namely, the Italian government has closed its ports to all cruise vessels, both foreign and domestic ones, until April 3, 2020.

The Italian cruise ships that were already at sea would have to return to port and subject their passengers and crews to a medical examination before allowing them to disembark. Those not experiencing any symptoms of the virus would nevertheless be advised to self-isolate for 14 days.

The association pointed out that the restrictive measures adopted by the Italian government do not restrict the transport of cargo in the country.

“The precautionary obligation of the so-called “Free Sanitary Practice” issued by the Local Office of Maritime Health remains in force. This document authorizes ships to berth, and all Italian ports are equipped and ready to apply any new measures deemed necessary by the Italian Office of Civil Defence, without compromising cargo operations,” the letter reads.

According to the latest update from the Italian Civil Protection, at the moment there are 46, 638 people who tested positive to the virus, and there have been 59, 138 confirmed infection cases so far. Some 7,024 people have recovered from the infection, while 5,476 people died.

(Source: Reuters, World Maritime News, American Shipper, Seatrade Maritime)