Issued on 24 Jun 20
In the third quarter, the shipping company's large-scale suspension will continue, and the container shipping industry may lose 23 billion US dollars this year
According to the latest data released by Alphaliner, by the end of May this year, the number of container ships at idle had risen to 551, with a total capacity of 2.72 million TEU, which is equivalent to 11.6% of the global total capacity. Set a record high in history!
According to the Lloyd's Daily, the impact of the new corona pneumonia epidemic on container transportation demand will continue into the third quarter of this year. In recent weeks, the shipping company's planned capacity to stop in the third quarter has suddenly increased.
The total number of suspensions of each alliance in the 23rd to 35th weeks are: 50 THE alliances, 16 Ocean alliances, 41 2M alliances, and 25 other or independent routes. The Ocean Alliance has the most invested capacity, followed by the 2M Alliance. However, the reduced capacity of the Ocean Alliance accounts for a very small proportion, only accounting for about 3.4% of the capacity it has invested. The most reduced capacity due to the suspension is the alliance, followed by the 2M alliance. The two alliances have reduced the capacity to account for more than 16% of their respective alliances.
The total number of routes suspended in the 23rd to 35th weeks in each region are: 33 US-West routes, 21 US-East routes, 33 Nordic routes, and 45 Mediterranean routes. The Nordic route invested the most capacity and accounted for 41.56% of the total reduced capacity. The reduced capacity of the Mediterranean route accounted for the largest proportion of its input capacity, at 15.88%.
On the demand side, ContainerTrades Statistics data shows that global demand growth fell sharply in April, with monthly data dropping by 16.9% year-on-year. From January to April this year, global container transportation demand contracted by 8.1%, which translates to a reduction of 4.4 million TEU in terms of TEU freight volume. In addition, the degree of contraction in demand varies from region to region. For example, the Indian subcontinent and the Middle East have been hit hardest. In April, imports and exports fell by more than 25%.
From the perspective of the capacity supply side, after experiencing a relatively stable state for about 6 weeks, the 23rd week of this year (the first week of June), the number of shipping companies announced the suspension of routes has increased dramatically. All economic indicators indicate that the epidemic will cause a continued downturn in global demand, and shipping companies, especially 2M Alliance and THE Alliance, will extend the suspension plan to the third quarter.
In detail, in the 23rd week, the increase in shipping capacity reached 15.2%, the highest weekly increase since the 14th week. In fact, the outage caused by the epidemic has reached the level of 4 million TEU, which is about 3.2 times that of the 2020 Spring Festival.
Before the 22nd week, the shipping company had not announced plans for a large-scale suspension in the third quarter. But in the 23rd week, just one week, the shipping capacity increased by 500,000 TEU. It is expected that in the next 24-35 weeks, shipping companies will reduce capacity by 7% on the Asia-North America West Coast route and Asia-North America East Coast route, while the Asia-North Europe and Asia-Mediterranean routes will decrease by 13% and 17%, respectively.
In other words, the trans-Pacific route will have a capacity of 420,000 TEU, while the Asia-Europe route will have a capacity of 790,000 TEU.
It is worth mentioning that the Ocean Alliance did not announce a large-scale suspension plan as early as the 2M Alliance and THE Alliance. This also means that the suspension plan from the Ocean Alliance may suddenly come.
From the 5th week to the 35th week of this year, a total of 257 voyages were suspended on the trans-Pacific route, of which 195 voyages were due to the epidemic and 62 voyages were due to the Chinese New Year.
For example, the number of Asian-European route suspensions reached 198, including 152 suspensions directly affected by the epidemic
Suspension in July
The number of the suspension of THE alliance is the first, followed by the 2M alliance. The number of OCEAN alliance suspensions is at the bottom, with only one suspension. Among them, the Ocean Alliance had the suspension data for the first time in July, and this suspension was the route from Asia to Northern Europe.
Judging from the changes in the suspension of the various alliances, the suspension of the alliance decreased by 3, the suspension of the 2M alliance increased by 4, and the suspension of the Ocean Alliance and other independent routes increased by 1.
The number of Asian-Mediterranean routes suspended is the first, followed by the US-Western route. Judging from the changes in the suspension of flights in various regions, the number of services suspended on the US-Western route decreased by 2, the number of suspensions on the Nordic route increased by 2, the number of ground-based routes increased by 3, and the number of services on the US-East route remained unchanged at 4 services.
Suspension in August A total of 28 services were suspended in August, of which the 2M alliance and THE alliance had the most suspensions, 11 each, and the Ocean Alliance had the least suspension, 2 services. In terms of routes, 9 voyages were suspended from Asia to Northern Europe and the Mediterranean Sea, temporarily tied for the first place, and the East America route was the least suspended.
From the perspective of the three major alliances, it is clear that shipping companies have become more skilled at using short-term tools such as suspension to adjust capacity and stay close to demand. The increasing proficiency in tactical capacity management, coupled with the level of integration between shipping companies over the past five years, means that shipping companies have the ability to maintain or even increase freight rates during the epidemic crisis. This new change surprised many industry observers.