Difficulties ahead!

The decline in scheduled services to China and South East Asia is only now reaching Europe. This could lead to delivery problems in the industry. And containers may become scarce outside the main economic centres. The situation in North American traffic, on the other hand, is still normal.

What impact is the production slump in China expected to have on Europe?

Maritime transport from China to Europe takes an average of 35 days. There has, therefore, been no slump in the supply of (preliminary) products from China so far, but this is changing.

At the height of the crisis in China, many shipping companies restricted their liner services to and from China. At present, only about 70 percent of the previous normal capacity is available. Fewer ships from China in the transport hubs of Rotterdam, Antwerp and Hamburg also means reduced feeder traffic and reduced hinterland rail/road transport. We expect that individual feeder transport routes will be completely discontinued at times. We are already seeing sharp declines in Italy as well as between Denmark and Norway.

The canceled routes will result in limited possibilities for European exporters by the end of March. Individual peaks in demand can also lead to bottlenecks in maritime freight out of Europe.

Are the ports functioning worldwide?

Yes. Even at the height of the corona crisis in China, transports were not canceled due to a lack of handling capacity at the ports. The Chinese ports will be able to handle even a significant increase in production after the end of the corona crisis (catch-up effect). Rather, difficulties are to be expected in pre- and post-carriage for port transhipment (road transport).

The same applies to the ports in Europe and America. Even in Italy, which is the country most affected by the corona virus in Europe, ports are considered vital infrastructure and operate normally.

Is this situation already impacting traffic with North America?

No, so far these routes have not been affected. However, as traffic on these routes is heavily influenced by the European export industry, there could be excess capacities in the coming weeks, which shipowners will respond to by thinning out traffic.

Are significant changes in freight rates to be expected?

Current data in the spot market points to slightly rising prices to and from China. However, this is probably a temporary phenomenon. Prices are expected to return to their previous level in approximately six weeks. In the meantime, flexibility will also decrease. However, companies with annual contracts will not be affected.

In European-North American traffic, we currently expect prices on the spot market to fall due to sufficient capacities.

Empty containers are piling up in China. What impact will this have on Europe?

There are indeed currently fewer containers available for European exports than usual. This is a temporary problem, which transport service providers are dealing with mindfully. There is also a growing willingness in the market to pay higher prices for containers. Larger companies are preparing accordingly. However, real bottlenecks in places other than the major economic centers are likely to occur if containers have to be transported long distances over land.

Do sick crews on the ships pose a danger to traffic?

Individual countries such as Singapore, Indonesia, Vietnam and Australia currently do not allow seafarers from China to go ashore. However, this has no critical influence on turnaround times. Due to the high level of automation in land operations, we do not expect any effects on cargo handling if quarantine measures in ports are extended.

Since the peak of the corona crisis, oil prices have fallen sharply. What impact will this have on future rates in maritime transport?

The fall in oil prices is driven not only by uncertainty and the collapse in demand, but also by political disputes between the OPEC cartel and Russia. We do not expect a short-term, sudden recovery of oil prices in the coming weeks. Rather, with time, shipowners will be passing on lower fuel costs to customers.

Are shipping companies financially sound enough to cope with the global economic slowdown? Or are transport capacities being taken off the market?

We do not expect any significant market exits on the part of shipping companies. At most, small Asian companies might be affected. Instead, we expect further consolidation through mergers. In addition, suppliers that have recently experienced strong growth could be forced to scale back some of their expansion in order to avoid overindebtedness. We do not expect this to result in changes to maritime freight rates, as physical transport capacities are expected to remain unchanged.

You can find more information about the impact of the coronavirus on the current transport logistics here.