While production and trade in China seem to be slowly picking up, the coronavirus is largely shutting down public life in parts of Europe and the US. For liner shipping, this could turn out to be a disastrous scenario, analyst firm Sea Intelligence warns. ‘It’s reminiscent of the 2008 financial crisis.’
Now that the World Health Organization (WHO) has characterised the coronavirus as a pandemic and the number of new cases in Europe and the US is constantly increasing, the outlook for container shipping has become even bleaker, says Lars Jensen, ship analyst and top executive of Sea Intelligence Consulting.
A few weeks ago, he talked about a volume decrease of about 1.9 million TEU due to the virus outbreak. However, this was based on the scenario that the virus would be contained in China and would not spread on a large scale to the rest of the world. It is now known that things turned out differently.
Damage of 17 billion dollars
The data analyst’s renewed Covid-19 outlook doesn’t lie. In the worst case scenario, seventeen million TEU would eventually be taken out of service this year. For the terminals, the loss could amount to some eighty million TEU. Total estimated financial damage for the whole sector: 17 billion dollars.
‘The situation is unprecedented and much is still unclear. However, there are clear similarities with the financial crisis of 2008’, says Larsen. ‘The global container volume shrank by ten per cent in 2008. Partly because consumers stopped spending, and partly because companies had to suspend their activities because of the liquidity problems that the crisis brought with it.’
According to Larsen, it is possible that this history will repeat itself: ‘Both phenomena are now about to occur again, as more and more countries are shutting down large parts of their public and private activities. As a result, people stay at home and spend less money, causing companies to face liquidity problems.’
Dutch corona measures
On Thursday, the Dutch Cabinet announced a number of measures in the fight against the spread of the coronavirus. For example, it is advised that anyone with complaints of a cold, coughs, sore throats or fever should stay at home and avoid social contacts.
It is also advised to work from home as much as possible or to spread the working hours. Meetings with more than a hundred people are cancelled throughout the Netherlands.
On Sunday, Dutch measures were extended resulting in the closing down of schools, daycare, restaurants, cafés, bars. All measures were extended from 31 March to 6 April.
This article first appeared (in Dutch) on Nieuwsblad Transport, a sister publication of SWZ|Maritime.
