The shipowners say that moves to idle Chinese factories beyond the end of the Lunar New Year has curtailed demand for vessels and forced them to adjust their capacity during what is already a low season for shipping because of the Chinese holiday.
BIMCO members, which include 1,900 shipowners, operators, managers, brokers, and agents, report limited or no demand from Chinese buyers of seaborne commodities, such as coal, crude oil and iron ore, said Sand. The lack of activity is reflected in
oil prices, which have crashed into a bear market.
Logistics company Freightos warned clients to expect delays in getting goods out of China and consider shifting some shipments from sea to air or even sourcing goods from other countries where possible. The backlog of shipments that typically follows the Lunar New Year will be made worse by the current situation, pushing ocean freight rates up and exacerbating delays, Freightos said.
Air cargo disrupted
It’s not just shipping that’s been affected.
IAG Cargo, the air cargo arm of British Airways parent IAG (
ICAGY), on Monday canceled all services to and from mainland China for at least the remainder of the month, citing a UK government travel advisory, according to a statement on its website.
German logistics group DHL has reported “severe disruptions to inbound and outbound air cargo shipments, trucking and rail cargo services.”
The lockdowns could have a “major impact on supply chain operations and industrial production” in China across industries such as automotive, pharmaceutical and medical supplies, and high-tech manufacturing, it said in a report.
DHL has suspended deliveries in Hubei province, the epicenter of the virus, but said it doesn’t foresee other changes to its operations.
UPS (
UPS) and FedEx Express (
FDX) said they continue to fly into and out of China. UPS said it has seen reduced demand for its services as a result of business closures.
