Virus May Mean $5bn in Airline Losses: UN Agency

February 14, 2020

The new coronavirus outbreak could mean a reduction of US$4-5 billion in worldwide airline revenue, the International Civil Aviation Organization (ICAO) said on Thursday.

The UN agency reported that 70 airlines have canceled all international flights in and out of China and 50 others have reduced their operations. Preliminary estimates show this has meant a reduction of nearly 20 million passengers compared to expectations for the first quarter of 2020. That figure equates to potential lost revenue of up to $5 billion, the agency said.

“Prior to the outbreak, airlines had planned to increase capacity by 9% on international routes to/from China for the first quarter of 2020 compared to 2019,” ICAO said in a statement.

The reality has been a reduction in foreign airline traveler capacity of 80%.

Japan looks to be hardest-hit from a reduction in Chinese air travelers in the first quarter, the ICAO said. The country could lose $1.29 billion in tourism revenue, with Thailand not far behind with a $1.15 billion loss potential. The ICAO said the effects of the Covid-19 virus outbreak on the airline industry are expected to be larger than the 2002-2003 SARS epidemic because flight cancellations are more widespread this time.

In addition, China’s international air traffic has doubled and its domestic air traffic increased five-fold in the last 17 years.

Chinese authorities have locked down Hubei province, the virus epicenter, and have restricted movements in several cities as part of an unprecedented effort to contain the virus.

Britain, Germany, the US, Japan and others have advised against travel to China.

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Source: Asia Times

Coronavirus: Freight capacity could become ‘biggest obstacle’ in March-April

February 14, 2020

A freight capacity crunch is likely this spring that could seriously hinder a return to normal international trade flows and now looks likely to disrupt global supply chains until April and potentially beyond, according to DHL.

In its latest update on the coronavirus outbreak in China, published yesterday, DHL’s Resilience 360 supply chain risk management platform warned: “While companies draw up contingency plans for production activities, supply continuation, and logistics services to cope with this complex and fast-changing situation, the crisis now looks (likely) to disrupt global supply chains until April and potentially beyond.

“While production-related challenges may be overcome in the coming weeks, limited inbound and outbound freight capacity could become the biggest obstacle in the months of March and April for supply chains to normalize. Chinese media organizations have put forward March 1 as the date when production schedules could return to near-normal operations; however, this will largely depend on when the outbreak will peak.”

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Source: Lloyd’s Loading List

MSC, Maersk Partner Up with SM Line on Transpacific Route

February 14, 2020

Shipping giants Maersk and Mediterranean Shipping Company (MSC), which together form the 2M Alliance, have found a new South Korean partner on the Transpacific trade as their cooperation with Hyundai Merchant Marine (HMM) expires.

As informed, the 2M carriers entered into a new cooperation agreement with SM Line, beginning on April 1, 2020.

According to MSC, the deal ensures the 2M partners “will provide continuity of services between Asia and the West Coast of North America, with improved services to the Pacific North West”.

Specifically, the new agreement with SM Line is separate from the 2M vessel sharing agreement between MSC and Maersk, and the services of 2M and SM Line will complement each other. The cooperation includes a combination of slot exchanges and slot purchases among the three parties – MSC, Maersk and SM Line – and is subject to regulatory approval.

“With the new agreement, MSC will be in a strong position to continue to offer six weekly services between Asia and the West Coasts of the US and Canada,” MSC said.

MSC added that its existing services to the US East Coast and Gulf remain unchanged and that the agreement between 2M and ZIM in the Pacific North West region also remains in full effect.

The move comes as HMM exits the three-year cooperation deal it had with the 2M carriers since March 2017. The company is joining THE Alliance and its counterparts Hapag-Lloyd, Ocean Network Express (ONE) and Yang Ming on April 1, 2020.

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Source: World Maritime

PIL to Exit Transpacific Market to Focus on North-South Trade

February 14, 2020

Pacific International Lines (PIL) announced on Feb 14, 2020 that the company will be withdrawing its services from the Transpacific market as a continuous effort to optimize its network efficiency

As a result of this service re-alignment, PIL’s last Transpacific sailing will be in March 2020.

The Company has taken this decision as part of a wider strategic review of its business. Henceforth, PIL will focus on further strengthening its position in the North-South Trade such as Africa, Middle East / Red Sea, India Sub-Continent, Latin America, and Oceania.

Pacific International Lines (PIL) is in the world’s top 10 containership operators and is the largest shipowner in Southeast Asia. PIL owns and operates a fleet of around 150 containerships, bulkers and multi-purpose vessels, serving more than 500 locations in over 90 countries worldwide.

Source: Company Announcement 

Coronavirus Predicted to Wipe 6m TEU of Chinese Box Volumes in Q1

February 6, 2020

Every segment of the shipping industry is now choking on reduced volumes of cargoes sparked by the coronavirus in China, which has now infected around 25,000 people around the world.

On the container front, analysts at Alphaliner are warning that the coronavirus will reduce container cargo volumes at Chinese ports – including Hong Kong – by over 6m teu in the first quarter of 2020. This volume contraction is expected to reduce global container throughput growth by at least 0.7% for the full year.

“The full impact of the Chinese coronavirus outbreak on container volumes will not be fully measurable until ports announce their throughput numbers for the first quarter, but data collected on weekly container vessel calls at key Chinese ports already shows a reduction of over 20% since 20 January,” Alphaliner warned in its latest weekly report.

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