Coronavirus pushes trans-Pacific container lull into March

Coronavirus pushes trans-Pacific container lull into March

China’s government this week extended the Lunar New Year holiday by three days, through Sunday, for most of the country, and through Feb. 9 in the areas hardest hit by the coronavirus. Photo credit: Shutterstock.com.

The spread of the coronavirus will lengthen the slow period for eastbound trans-Pacific freight volumes that traditionally follows Lunar New Year celebrations in Asia well into March due to a Chinese government mandate extending the holiday throughout the country.

Vessels arriving at US ports in the coming week or two should be relatively full. Past experience indicates that factories in China close out their final orders before the Lunar New Year, filling ships and causing some shipments to be rolled to departures the following week. Lunar New Year celebrations began Jan. 25. 

Spot rates this month have remained higher than in December, indicating that the pending Lunar New Year holiday generated high vessel utilization rates. The spot cost to move an FEU from Shanghai to the East Coast last week was $2,951, and West Coast rates were $1,545 per FEU, remaining in the range they have been in throughout January, according to the Shanghai Containerized Freight Index (SCFI) published under the JOC Shipping & Logistics Pricing Hub

China’s government announced this week it was extending the holiday by three days, through Sunday, for most of the country, and through Feb. 9 in the areas hardest hit by the virus — Shanghai, Shenzhen, Ningbo, Xiamen, and Qingdao. Extending the holiday is meant to limit the interaction of individuals in work settings to lessen the spread of the virus, but it means that production at factories and shipping operations at the ports will be interrupted at least a week longer than usual.

The final vessels that left Asia before Jan. 25 will begin arriving on the North American West Coast next week, and by mid-February on the East Coast. The trade had already built several weeks of depressed import volumes into their operations in February and March by announcing more than 40 blank sailings beginning Feb. 9.

Most of the blanked sailings announced by carriers were scheduled for mid-February until early March. However, the government mandate extending the holiday in the Wuhan-Shanghai corridor through Feb. 9 means that lower-than-anticipated import volumes at US ports will be experienced throughout March. It takes 10 days to two weeks for vessels leaving China to arrive in North America. Carriers have not yet announced if they will blank additional sailings in March, but Alan Murphy, CEO of Sea-Intelligence Maritime Consulting, told JOC.com Thursday that barge volumes in the Wuhan-Shanghai corridor “will obviously be impacted hard” and additional blank sailings are likely.

Skeleton crews at Chinese ports, warehouses

Reduced crews are working this week at marine terminals, warehouses, container freight stations, drayage companies, and regulatory agencies in China. “Ports/terminals are operating with skeleton staff to fulfill basic operations like vessel unloading/loading through Feb. 9,” a US-based footwear importer reported Thursday in a bulletin to customers.

The US Coast Guard, in a Jan. 24 notice, said vessel representatives are instructed to report any incidents of sick or deceased crew that took place within the previous two weeks. The Coast Guard will continue to review all notices of arrival and report such incidents to health agencies. 

Port authorities say they are working with local, state, and federal health agencies and enforcement bodies. The ports of Los Angeles and Long Beach said their port police, working with health agencies, have standard plans in place to deal with communicable diseases, including the coronavirus.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.