Dive Brief:
- Maersk and CMA CGM announced blank sailings Friday as the container lines see curtailed demand due to the coronavirus outbreak in China and the extension of the Lunar New Year holiday.
- The two carriers said operations at terminals, warehouses, depots and offices in China, with the exception of Wuhan, continue uninterrupted.
- Not all carriers have announced blank or void sailings. "We don't have any plans to blank sailings or omit ports," a spokesperson for Hapag-Lloyd told Supply Chain Dive. "But we are watching the developments closely and will decide on short notice." ONE said in a customer advisory that other than ports in Hubei province, "vessels are still maintaining their normal port calls and operations."
Dive Insight:
Carriers canceling port of calls and blanking sailings is not an uncommon practice around the Lunar New Year as output, and therefore demand, for export transport from China slows.
The spreading coronavirus has extended the holiday and production shutdown, prolonging the usual seasonal slump on trade lanes out of Asia. The Chinese government requested companies operating in the country stay closed until Monday, according to CMA CGM. In addition, many local governments extended the holidays to Feb. 9 and Feb. 13 in Hubei province, where Wuhan is located.
The continued production stoppage will create a backlog of shipments once restrictions lift and operations get back up and running, which will most likely lead to increased freight rates and cargo delays, according to Freightos.
The extended holiday has further decreased demand and prompted the need for blank sailings, Maersk said, though it "endeavours to balance our network to match reduced demand."
CMA CGM noted "demand deterioration on the Asia / North Europe trade caused by the Coronavirus" as the impetus behind its blank sailings. Both carriers proposed alternative coverage for shipments.
The trend of blank sailings "is expected to persist if the virus continues to spread," BIMCO said in an analysis emailed to Supply Chain Dive.
Freightos recommend shippers anticipate delays in goods coming out of China and to consider moving some planned ocean shipments to air, with the caveat that if several shippers go this route, the demand spike will also affect air freight rates.
In addition, belly cargo capacity is already reduced, as airlines such as British Airways, United Airlines and Cathay Pacific have suspended flights to and from China.
In past examples of virus outbreaks, markets have rebounded within months, according to BIMCO. However, "The outbreak of the coronavirus adds yet another layer of massive uncertainty to the shipping markets," it said.
