Shock for carriers as spot rates fall below long-term contract prices
Spot container freight rates on the main east-west deepsea headhaul trades continued to edge downwards ...
Coronavirus is beginning to impact shipping operations in the Indian subcontinent.
Blanked westbound Asia-North Europe sailings mean export containers out of India that tranship at Colombo are not being picked up.
In addition, the widespread closure of automotive component production facilities is having a severe impact on India’s burgeoning car manufacturing industry.
Sujan Roy, head of international business, passenger vehicles, at Tata Motors, told delegates at Air Cargo India today: “If you add a crisis like this into the mix it makes life so much more difficult – car manufacturing is like a grand ballet. A car is made up of 6,000-7,000 parts put together across different countries.
“Normally these parts are all delivered fine, but right now all bets are off – my logistics guys are going mad and not sleeping at all.”
Tata operates four manufacturing plants in China, he said.
“If they aren’t working, the parts aren’t getting to India, and right now things are looking desperate, and it will take a long time to work it out,” he said.
The situation is being compounded by an increasing scarcity of containers for exporters.
One forwarder that procures empty 20ft containers in the Indian gateway of Nhava Sheva for automotive exports told The Loadstar that, while there was normally three-weeks’ worth of available empty boxes, “there is now barely two days’ stock”.
Meanwhile 20ft containers in the UK – favoured by the country’s chemical and other industries that produce heavy cargo – have “become impossible to find” as the stock in the country simply isn’t being replenished as many of the units were delivered to Chinese consignees, unloaded at their facilities and have since remained there in the aftermath of the extended holiday and resulting large numbers of truck drivers who have yet to return to work.
“The shortage is already hitting exports out of Europe and I expect imports are going to be seriously affected in the next four weeks. March is going to be terrible; I reckon we’ll be 70% down, year on year, in terms of volumes,” one forwarder told The Loadstar.
This could have a knock-on effect for the air cargo sector, as European retailers and manufacturers are becoming increasingly anxious about declining inventory levels.
“We are getting charter enquiries every day and I would expect that to double over the next couple of weeks,” one forwarder told The Loadstar, “and I fear that in the next 10 days to two weeks, there is going to the fastest air freight peak ever seen.”