Expect tight ocean freight capacity for the next few months due to extended CNY holiday
As we noted in our last Market Update, we have been seeing an acceleration of carriers cutting back on sailings due to the slowed factory ramp-up and subsequent lack of freight caused by the extended Chinese New Year (CNY) holiday.
In case you missed it, most major cities and provinces in China have extended CNY holiday to Feb 10 in an effort to contain the spread of a new and deadly coronavirus which began infecting people at the end of December last year.
In this article, we'll take a look at the blank sailings announced by the alliances and see how the coronavirus is impacting U.S. port operations.
Blank Sailings On The Rise in Q1
China ports could see Q1 container volume down by 6 millon TEUs due to the coronavirus
While it will be difficult to understand the true impact of the coronavirus on China's container throughput until after ports announce their Q1 numbers, liner shipping analyst Alphaliner reported a 20% decline in weekly container vessel calls at the main Chinese ports since Jan 20.
The analyst predicts that the extended CNY holiday could cause China's container volumes in Q1 to drop by 6 million TEUs, resulting in a 0.7% reduction in global container volume in 2020. In 2019, Wuhan, where the coronavirus outbreak first began, handled 1.7 million TEUs, or 0.6 percent of all Chinese port throughput, the analyst reported. The port has been closed since Jan 23.
In response to the extended holiday and virus outbreak, carriers across all major alliances have announced over 100 blank sailings. More sailings could be cancelled into mid-March and even April if the situation does not improve.
Q1 Blank Sailings: Breakdown By Alliance (Updated 2/18)
Ocean Alliance
- 9 blank sailings have occurred between Weeks 4 to 5
- 34 more blank sailings occured between Weeks 6 to 7
- 25 blank sailings announced from Weeks 8 to 17
THE Alliance
- 8 blank sailings have occurred between Weeks 1 to 5
- 8 more blank sailings occured between Weeks 6 to 7
- 12 blank sailings announced from Weeks 8 to 13
2M Alliance
- 7 blank sailings have occurred between Weeks 1 to 5
- 10 more blank sailings announced from Weeks 6 to 7
- 13 blank sailings announced from Weeks 8 to 11
For a complete list of announced blank sailings and all the details, click the button below to download the report.
(Excel .XLSX 774 KB) | Updated on Feb 18, 2020
Note that space on vessels will be limited in Q1, with less frequent calls than usual because if a blank vessel is announced, it is pulled from service loops completely. Shippers should expect 2+ week delays for most ocean freight shipments into and out of China as cargo is rolled to vessels sailing at later dates.
Service at the ports will be delayed into March. Staff at ports, shipping lines, truckers, and factories will be limited due to travel restrictions and checks put in place by the Chinese government to control the spread of the virus.
Some steamship lines, like ONE, announced that they will not be resuming office work until Feb 24. CMA-CGM and APL expect to return to full operations on Mar 2.
Most container depots in Ningbo, Shanghai, Guangzhou, and Shenzen remained closed through Feb 10, while others were only operating at partial capacity. Once they come back online, they will be digging out of a backlog of containers that have been sitting since the holiday began.
Reefer cargo will be especially impacted due to lack of plugs available in certain areas: Ningbo, Shanghai, Xingang, Busan, and Singapore.
USA Domestic Ocean Freight Impacts
Arrival screening procedures for U.S. Ports may cause delays stateside
The Coronavirus has begun to impact port operations in the U.S. as well. Port authorities in the U.S. are implementing reporting and quarantine measures to guard against the spread of the coronavirus from vessels that have previously called at infected ports. These procedures will slow vessel berthing, causing some congestion at both USEC and USWC ports.
"We first saw vessels being held from discharge in Long Beach due to coronavirus screenings," said UWL Import Supervisor Kim Bohanon, LCB. "Our understanding is the captain has to report on the health of the crew before the vessel is allowed to berth. This could affect our clients' overall supply chain potentially for the next 60 to 90 days."
Indeed, on Feb 2, the U.S. Coast Guard announced new U.S. port arrival procedures for all vessels that have called Chinese ports (excluding Hong Kong and Macau), effective immediately. Some of these procedures include:
- Illness of a person onboard a vessel that may adversely affect the safety of a vessel or port facility is a hazardous condition and must be immediately reported to the U.S. Coast Guard Captain of the Port (COTP).
- Vessels destined for a U.S. port are required to report to the CDC any sick or deceased crew/passengers during the 15 days prior to arrival at a U.S. port.
- Passenger vessels or any vessel carrying passengers that have been to China (excluding Hong Kong and Macau) within the last 14 days will be denied entry into the United States. If all passengers exceed 14 days since being in China and are symptom free, the vessel will be permitted to enter the US to conduct normal operations.
- Commercial vessels that have been to China (excluding Hong Kong and Macau) within the last 14 days, with no sick crewmembers, will be permitted to enter the U.S. and conduct normal operations, with restrictions. Crewmembers on these vessels will be required under COTP authority to remain aboard the vessel except to conduct specific activities directly related to vessel cargo or provisioning operations.
If there are no sick crewmembers on board, vessels will be permitted to berth as usual.
Conclusion
Blank sailings are on the rise in Q1 due to the extended CNY holiday, slowed factory ramp-up, and quarantine measures put in place to contain the spread of the Wuhan coronavirus.
59 blank sailings during Weeks 6-8 have been announced across all the main liner alliances.
Shippers moving cargo to and from China should expect delays, especially over the next three weeks as laborers slowly return to work and dig out of the backlog.
Some congestion and slower service may occur at U.S. ports due to the preventative coronavirus screenings of vessels mandated by the U.S. Coast Guard.
For more information, check out some of our other resources below:
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