Shipping companies are taking action after a massive decline in earnings, caused by Coronavirus outbreak.
The rates in container shipping markets have been decreasing even if there has been a boost in blank sailings, and the volume of idle capacity in the world box ship fleet continues to grow.
Carriers have decided to decrease their rates through the Shanghai Containerised Freight Index on the Shanghai Shipping Exchange, as they are facing losses and shrinking revenue.
The SCFI index, which retook operation on the 14th of February, showed Asia-Europe rates decreased over 12% from the pre-holiday level on January 23.
In order to stop the coronavirus from spreading, several cities in China are still not allowing factories & businesses to reopen, which means sales and production have been affected.
The blanked sailings, as well as the delays, have led to increasing the number of idle vessels in the world containership fleet.
A number of carriers have announced further blank sailings in the coming weeks and warned that this could push the inactive fleet capacity to more than 1.6m TEU, with all ship sizes above 1,000 TEU negatively impacted.
The port operations in China have also faced difficulties caused by a lack of workers, as the containers are stacking up at a number of ports due to a lack of truck drivers returning to work following the holiday.
“Due to the coronavirus effects, lots of containers have been stuck at the Ningbo-Zhoushan port, seriously affecting foreign trade and port operations in our province,” said policy guidance issued this week by the government of Zhejiang Province, where the port city of Ningbo is based.
To improve the situation, a compulsory 14-day quarantine period will be removed for non-local drivers from regions with low virus risks as part of the package of solutions to the problem, according to the document.
The goal is to bring 3,000 drivers back by 23rd of February, and to double that number by the end of the month and “resume normal operations at the port”, said the document.
Carriers are responding to the situation by imposing surcharges on temperature-controlled trailers (TCT) going into certain Chinese ports. Ocean Network Express (ONE) is just one of the carriers taking charge, and have imposed a $1,000 per container congestion charge on refrigerator trailers going into Shanghai and Xingang in Tianjin, effective immediately.
The Japanese carrier has justified the charge due to the slow container pick-up activity caused by the outbreak of the coronavirus and the extension of the Chinese New Year holidays, Xingang and Shanghai in particular, as well as some other Chinese terminals, are facing a serious shortage of TCT charging points.
CMA CGM and its APL unit have also introduced a $1,250 surcharge for TCT’s for the two ports, as well as Ningbo. German carrier Hapag-Lloyd also announced that it was adding a global $500 per TEU surcharge for TCT boxes destined to China.
Source: Lloyd's List
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