45% ports see drop in containership calls: IAPH report

A weekly report from the International Association of Ports and Harbors - IAPH-WPSP Port Economic Impact Barometer shows that the COVID-19 pandemic impacts ports differently according to the regions.

The report authored by Port Economics members Theo Notteboom and Thanos Pallis shows that cancellations, mainly on routes to the Far East, are clearly affecting container ships.

Some 45% of ports report that the number of containership calls fell by between 5% and 25% compared to 34% the previous week, while 8% of ports faced a significant drop, over 25% in containership calls.  Ports reporting reductions of more than 25% in calls in the cargo ship category increased to 16%; less than half of the ports mention that the number of calls of other cargo ships is fairly stable compared to a normal situation.

In North America, boxship calls have deteriorated rapidly in recent weeks. This week, 71% of ports responding to the survey have experienced a 5%-25% reduction in container ship calls, a figure well above the world average.

However, the WPSP Covid-19 Working Group expects a recovery by the end of May/beginning of June for some ports in Asia in terms of container shipping services, with a corresponding positive impact six to eight weeks later in regions such as Europe and North America.

"We are beginning to see some lines reintroduce services on the main East-West routes that they had previously neglected. We have also received reports from East Africa of a return of liner services out of Asia this week, which is a positive development,” explained Notteboom.

More and more ports are reporting under-utilisation of liquid bulk storage facilities, 26%. The proportion of ports with higher levels of use of liquid bulk storage facilities has fallen to 13%, the lowest figure since the start of the survey.

A similar development is observed in the solid bulk sector, 32% of ports report under-utilisation of facilities compared to a range of 17% to 25% in the last six weeks. The proportion of ports with higher levels of utilisation in solid bulk storage has decreased to 10%, also the lowest figure to date.

North American ports are experiencing fewer delays in inland transit and greater availability of port workers. The hinterland transport situation in that region is, on average, much less disrupted than it is worldwide, particularly for trucks entering and leaving port areas. Except for railways, the number of ports that have faced hinterland transport disruptions has remained below 20%.

In addition, North American ports generally report few problems with the availability of port workers.

"The members of our WPSP Covid-19 Working Group have given us a unique insight into the changing impact of the contagion on ports in different regions of the world. We now see Asian ports fully operational and with promising signs in terms of recovery. European ports are gradually returning to the 'new normal', while ports in regions such as South America and Africa are having to adapt to the contagion, which in many cases is reaching its peak there,” said IAPH director general Patrick Verhoeven. “We expect more ports in the Middle East and Asia to participate in the next survey.”

Container lines ‘un-blank’ a small number of sailings

Container lines have started to ‘un-blank’ a small number that had been cancelled in Q2 according to analysts Sea-Intelligence.

Data from the analyst showed that the number of blank sailings announced by lines had remained relatively constant for the last five weeks, and this past week had seen lines actually re-instating, or un-blanking, a small number of services. The latest move though does not yet indicate a rebound in the market as countries start coming out of COVID-19 lockdownss.

“However, it is also clearly shown by the data that this is purely a very small change to the overall development in blank sailings. It cannot be seen as a rebound in demand, nor can it be construed as ‘strong’ demand,” said SeaIntel ceo Alan Murphy.

“It can only be seen as another indication that the carriers’ approach is to blank sailings aggressively to ensure decent utilization on the vessels that do indeed sail, and in the process avoid rate declines.”

As yet lines have not announced any blank sailings for Q3 but these are expected to start being announced in the coming two weeks.

 Maersk Latin America chief– Expect more volumes in H2 if the region re-opens

In an exclusive interview, Maersk Latin America ceo Lars Oestergaard Nielsen, talks about volumes, routes and the impact of COVID-19 in the region.

Speaking to Seatrade Maritime News Nielsen explains the impact has been seen on container shipping in Latin America in Q1. “While we don’t share specific numbers the overall view we have is that exports during Q1 from Latin America has been affected only to a small effect whereas towards the end of Q1 we have started seeing a clearer impact on the import volumes.

“This of course makes sense with the increasing lockdowns across the region.  The volume of import is in general linked to the population size and thus the main destinations in Latin America are the largest countries like Brazil, Mexico, Argentina, Chile, Colombia and Peru,” says Nielsen.

While the industry has seen cancellations worldwide, Maersk had to follow the trend to some extent.  “We have during Q1 been very close to our standard level of service but like everyone else we have of course had to react to the impact of COVID-19 on our business. This has led to around 10% capacity reduction,” he acknowledges.

 “We expect that we will be continuing to service all countries as per our normal coverage. We will of course need to adjust capacity to the reduced demand and while this is somewhat dynamic and fluid we expect there will be around a 20% reduction in capacity during Q2.”

“Yes, we do expect that volumes will start to recover in the second half of the year but of course this will depend on the re-opening of economies across the region. We will continue to adjust the capacity to match.

“The safety our crews is a priority for Maersk. We have taken all precautions to go above and beyond when it comes to apply the health measures from the authorities. When a case has been identified in a vessel, we put in place a robust plan to isolate the seafarer bringing him/her to shore for medical treatment, as well as protecting the rest of the crew. Maersk took the decision at the beginning of the crisis to extend the shifts within all vessels for 30 days, and now the company is evaluating new measures to protect much better those who are getting onboard.”

Nielsen joined AP Moeller-Maersk in 1992, holding various commercial and management roles in Asia and Latin America. In December 1, 2017, he was appointed regional ceo of Maersk in the Latin America and the Caribbean based In Panama.

 Coronavirus may lead to 'largest decline in shipping volumes 

As the retail industry across Europe and North America begins to effectively shut down as governments enforce widespread social lockdown, there are increasing warnings that the container shipping industry is set to see some of the largest declines in volumes in living memory.

According to liner analyst SeaIntelligence Consulting, the possibility of a 10% decline in global container shipments – which would equate to 17m teu carried by the world’s box shipping fleet and some 80 teu handled in global container ports – has “unfortunately moved closer to reality”.

SeaIntelligence Consulting chief executive Alan Murphy said: “Economists at Goldman Sachs are now forecasting a staggering 24% decline in US GDP in the second quarter of 2020.

“We also have US business inventories being 10% larger than just before the financial crisis, when they are compared to the magnitude of sales – and during the financial crisis, inventories were reduced by 18%.

“On top of that, we are seeing restrictions in ports, a few even banning vessels if they have been in virus-afflicted countries or shutting down temporarily when they find workers who have tested positive for the virus,” he added.

The year’s first decline in container volumes was expected – the Chinese New Year holiday is an annual slump in container shipping’s diary, but as coronavirus infections grew in Wuhan, the Chinese authorities extended the two-week factory shutdown until it could bring the outbreak under control.

Hopes that this might lead to sudden surge in purchase orders being sent to Chinese producers were short-lived, however, as infection numbers grew in Europe and the subsequent hit on demand has become more obvious.

Mr Murphy also warned that the sudden precipitous drop in oil prices, which, on the face of it a welcome respite for the sector, could undermine the industry’s long-term quest for balance between supply and demand.

The problem is that the decline in oil prices has led to the differential between high-sulphur fuel oil (HFSO) and low-sulphur fuel oil (LSFO) reducing sharply. At the beginning of the year, as the IMO’s new low-sulphur regulations came into force, the difference was $300 a ton, today the difference is just $60.

This has meant the economics of investing in exhaust gas cleaning scrubbers have, effectively, been thrown out of the window and may lead numerous carriers cancelling scrubber retrofit orders, which in turn could mean more vessels on the water looking for cargo and, ultimately, a sharp decline in freight rates.

Mr Murphy added: “At the same time, scrubber installations are seriously delayed in China due to the virus. The consequence might well be that vessels which were otherwise planned to go for scrubber installation instead re-enter the operational fleet.

“This would add more capacity to a situation where demand is about to drop sharply.”

                                                                (Source: The Maritime Executive, American Shipper, Seatrade Maritime)