Shipping industry in choppy waters as coronavirus evokes 2016 slump and Hanjin bankruptcy
- Events surrounding the coronavirus outbreak have destroyed demand, shipping association BIMCO says
- Industry profits could slide 25 to 30 per cent, reminiscent of the 2016 slump that bankrupted Hanjin Shipping: Moody’s
Global container shippers idled 2.46 million twenty-foot containers as of March 2, equivalent to 10.6 per cent of total industry capacity, according to industry researcher Alphaliner. The pullback is worse than during the aftermath of the 2008 global financial crisis.
While the current container rates of US$1,500 per forty-foot boxes remain above the US$1,400 average in 2019, they are being unsustainably propped up by shrinking capacity and cancelled sailings. BIMCO, the world’s largest shipping association, sees lower prices as the pandemic worsens.
“Before the pandemic, BIMCO expected average freight rates for 2020 to come down from last year,” chief shipping analyst Peter Sand said in a report on March 19. “They will now become even lower” on contraction in demand, he added.
