Carriers have pulled 1.67m teu of capacity out of China, costing $1.5bn

The Loadstar ^ | 19/02/2020 | Mike Wackett

[Rebelbase]

Carriers have pulled 1.67m teu of capacity out of China, costing $1.5bn

By Mike Wackett 19/02/2020

Ocean carriers have withdrawn more than 1.67m teu of export capacity from China since the lunar new year holiday, according to an Alphaliner survey.

Based on an average freight rate of $1,000 per teu, the cumulative revenue lost to the carriers will have exceeded $1.5bn, putting some of the less-financially secure container lines at risk.

And with a significant link in the supply chain broken, manufacturers worldwide face lengthy shutdowns due to a lack of vital components .

Planned blank sailings post-Chinese new year and a mass of last-minute cancellations, as production and container transport came to a near standstill in the coronavirus outbreak, has resulted in an “unprecedented” level of tonnage being withdrawn, said the consultant.

Alphaliner’s survey reveals 33 sailings from Asia to North Europe have been withdrawn in the past four weeks, representing 46% of scheduled departures, with a further 17 voyages due to be pulled in the coming weeks.

This would take capacity withdrawn on the tradelane to some 700,000 teu over the eight-week period following CNY.

“A significantly deeper cut than in previous years and it compares with post-CNY cuts of just 340,000 teu in 2019 and 210,000 teu in 2018,” said Alphaliner.

It also said there was a similar situation on the transpacific, with approximately 680,000 teu of capacity removed from Asia to US west and east coast services.

For the Mediterranean route, it estimated some 290,000 teu had been withdrawn.

Although China’s manufacturing production levels are slowly gaining momentum, the intermodal transport sector is still struggling, due to driver shortages and anti-virus restrictions. There are reports coming into The Loadstar of trucking remaining scarce and only available at vastly inflated prices.

Alphaliner also noted that utilisation on the vessels that have sailed “remains low”. Indeed, anecdotal reports to The Loadstar in the past week were of ULCVs departing from China “less than 20% full”. Unless those vessels are topped up in other Asian ports, this will result in substantial losses for the carriers.

With the disruption in China severely affecting headhaul traffic, carriers are being obliged to hold or cancel backhaul sailings until the situation improves. Moreover, carriers are advising shippers of box shortages in some regions, as their equipment control breaks down due to the network disruption.

Meanwhile, global car manufacturers that rely on sourcing parts from China are now on the front line of the crisis and facing shutdowns.

UK-based Jaguar Land Rover said yesterday it was just two weeks from having to halt production at its car plants at Castle Bromwich, Halewood and Solihull as it runs out of parts.

CEO Sir Ralph Speth said it had resorted to bringing vital parts from China in the holds of commercial flights and was currently only able to provide a single key fob to customers taking delivery of new vehicles.

[Rebelbase]

"with a significant link in the supply chain broken, manufacturers worldwide face lengthy shutdowns due to a lack of vital components "

[Vigilanteman]

Too many supply chain managers putting too many eggs in the China basket . . .

[null and void]

"All this fuss for a flu?" ~ Michelle Obama, paraphrased...

Bring Out Your Dead

Post to me or FReep mail to be on/off the Bring Out Your Dead ping list.

The purpose of the “Bring Out Your Dead” ping list (formerly the “Ebola” ping list) is very early warning of emerging pandemics, as such it has a high false positive rate.

So far the false positive rate is 100%.

At some point we may well have a high mortality pandemic, and likely as not the “Bring Out Your Dead” threads will miss the beginning entirely.

*sigh* Such is life, and death...

If a quarantine saves just one child's life, it's worth it.

[Reno89519]

Redistributing production away from China is long overdue. We should never have allowed communist China to profit off of us.

[Chgogal]

Bookmark

[Vermont Lt]

But it’s just the flu.

[1Old Pro]

Redistributing production away from China is long overdue. We should never have allowed communist China to profit off of us.

Tough to compete with slave labor, no environmental regulations, etc.

[central_va]

We need a very high across the board import tariff to force, coerce or make inevitable the repatriation of ALL industry.

[RayChuang88]

I expect many companies to start looking at other countries for manufacturing. Southeast Asia, Northern Africa and much of the Americas suddenly become really attractive again.

[sanjuanbob]

Could India be somewhere in the mix?

[Mariner]

Brazil.

[llevrok]

Guam should make a play. They are in the geographic middle of the Pacific. Great location. And it’s ours.

[Tilted Irish Kilt]

Reno89519 :" Redistributing production away from China is long overdue.
We should never have allowed communist China to profit off of us."

But realize what the real problem is, and we helped to create it.
All business in China is run by the Communist party.
In order to do business in China, you have to surrender all your propriety information to the manufacturing business (owned by the government)
Then, with your proprietary information already in hand, you end up competing with the government business (already owned by the government)
Then through unfair trade balances, the Chinese govt. undercuts your sales price of your product(already armed with your proprietary information)
Then the government adjusts the international monetary rate, thus further undercutting your sales, making their product cheaper
Then the Chinese govt. may actually subsidize the business to assure that they have the lowest price.

That is how we got where production is self-defeating the interests of the nation
- all for the lowest cost production or sales price.

[Tench_Coxe]

"Guam should make a play."

No way. According to Democrat Hank Johnson, too much weight will make it tip over.

[HighSierra5]

This could actually work out well to get us out of the China thumb.

[Reno89519]

Hey, notice no one commenting on the oppressive smog Trump encountered in cesspool India?

[1Old Pro]

Hey, notice no one commenting on the oppressive smog Trump encountered in cesspool India?

Funny, I didn't hear Acosta ask if they discussed pollution in India and what they are doing to curb it.

[BipolarBob]

I wouldn’t have thought this possible for all of the teu in China.

[wildcard_redneck]

“I expect many companies to start looking at other countries for manufacturing. Southeast Asia, Northern Africa and much of the Americas suddenly become really attractive again.”

Um, what happens to all of the maquiladora factories when Mexico inevitably has another revolution? I suppose the plan is to then invade and seize the territories for new states.

[dp0622]

Yeah in the mix of worthless, horrible English speaking, condescending punks.

I HATE getting them on the phone.