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Major Chinese container ports saw a 9.1% increase in volumes last week
Chinese ports are getting back to normal after the coronavirus (COVID-19) outbreak and last week saw 9.1% jump in container volumes, however, bulk shipments were down.
The last week has seen a continued positive trend for container volumes at China’s largest container ports.
According to China Ports & Harbours Association, for the week of 2 – 8 March, the container throughput of the eight major container ports increased 9.1%. Among them, the growth rate of Dalian, Tianjin, Qingdao and Guangzhou increased 10%. The overall growth rate of Bohai-rim ports is faster than other coastal ports.
While container volumes were up crude oil and iron ore volumes at major loading and unloading ports dropped last week.
Apart from ports in Hubei, the epicentre of the virus outbreak, other ports along Yangtze river have returned to normal operation. The cargo throughput of three major ports at Yangtze river, Nanjing, Wuhan (in Hubei) and Chongqing increased 7.7%, while the container throughput increased 16.1%.
Currently, the ports in Hubei are recovering slowly and face a lack of staff and workers. Staff are mainly involved in services related to epidemic prevention and medical appliance supplies and providing logistics services for manufacturing companies.
However, the recovery of Chinese container volumes now faces the impact on demand from the growing spread of the pandemic to Europe and the US.
China January February exports tumble, imports slow as coronavirus batters trade and business
China’s exports contracted sharply in the first two months of the year, and imports declined, as the health crisis triggered by the coronavirus outbreak caused massive disruptions to business operations, global supply chains and economic activity.
The gloomy trade report is likely to reinforce fears that China’s economic growth halved in the first quarter to the weakest since 1990 as the epidemic and strict government containment measures crippled factory production and led to a sharp slump in demand.
Overseas shipments fell 17.2% in January-February from the same period a year earlier, customs data showed on Saturday, marking the steepest fall since February 2019.
That compared with a 14% drop tipped by a Reuters poll of analysts and a 7.9% gain in December.
Imports sank 4% from a year earlier, but were better than market expectations of a 15% drop. They had jumped 16.5% in December, buoyed in part by a preliminary Sino-U.S. trade deal.
China ran a trade deficit of $7.09 billion for the period, reversing an expected $24.6 billion surplus in the poll.
Factory activity contracted at the fastest pace ever in February, even worse than during the global financial crisis, an official manufacturing gauge showed last weekend, with a sharp slump in new orders. A private survey highlighted similarly dire conditions.
The epidemic has killed over 3,000 and infected more than 80,000 in China. Though the number of new infections in China is falling, and local governments are slowly relaxing emergency measures, analysts say many businesses are taking longer to reopen than expected, and may not return to normal production till April.
Those delays threaten an even longer and costlier spillover into the economies of China’s major trading partners, many of which rely heavily on Chinese-made parts and components.
China’s trade surplus with the United States for the first two months of the year stood at $25.37 billion, Reuters calculation based on Chinese customs data showed, much narrower than a surplus of $42.16 billion in the same period last year.
Soybean imports in the first two months of 2020 rose by 14.2% year-on-year as cargoes from the U.S. booked during a trade truce at the end of 2019 cleared customs.
After months of tensions and tariff hikes that dragged on bilateral trade, the world’s two biggest economies agreed an interim trade deal in January that cut some U.S. tariffs on Chinese goods in exchange for Chinese pledges to massively increase purchases of U.S. goods and services.
The U.S. expects China to honor these commitments despite the coronavirus outbreak, a senior U.S. official said in February.
VIRUS THREATENS GLOBAL RECESSION
The supply and demand shocks in China are likely to reverberate through global supply chains for months, and the rising number of virus cases and business disruptions in other countries is raising fears of a prolonged global slowdown or even recession.
In response, global policymakers have stepped up efforts to cushion the economic blow of the epidemic, with the U.S. Federal Reserve delivering an emergency rate cut last week.
Shortages of vital parts and components from China last month cost other countries and their industries $50 billion, a United Nations agency said on Wednesday.
The virus outbreak escalated in late January just as many businesses were winding down operations or closing for the long Lunar New Year holidays, and as hundreds of millions of Chinese were returning to their hometowns.
China customs said last month it would not release separate figures for January and would combine January and February instead, in line with how some of the country’s other major indicators are released early in the year, which is intended to smooth distortions created by the holidays.
Tough public measures such as restrictions on travel and quarantines meant many of these people were unable to return to their jobs in offices, factories and ports until only recently.
Some firms which have reopened have faced shortages of parts and other raw materials as well as labor, while others report inventories of finished goods such as steel are piling up as downstream customers like car plants slowly crank up production again.
Iron ore imports rose 1.5% over the first two months, supported by firm demand at steel mills even though the coronavirus outbreak had disrupted downstream sectors.
Parts of central Hubei province, the epicenter of the outbreak and a major transport and manufacturing center, are expected to remain under lockdown well into March.
Analysts at Nomura estimate only 44% of the businesses worst affected by the outbreak had resumed operation as of March 1, and 62.1% across the economy as a whole. As such, they forecast economic growth will slump to 2% in the first quarter year-on-year, from 6% in the previous quarter.
Beijing has already stepped up support measures, including offering cheap loans to affected businesses, and policy sources have told Reuters that more steps are expected as authorities try to cushion the epidemic’s impact on the economy.
China’s commerce ministry said on Thursday that more than 70% of foreign trade companies in the coastal provinces have resumed work.
But financial magazine Caixin reported this week that some companies were keeping machines running and lights open throughout the day even though they have no goods to produce, in a bid to allow managers and local officials to inflate the official work resumption rate. Reuters wasn’t able to verify this report.
JNPT calls hit by coronavirus and scrubber retrofits
Jawaharlal Nehru Port Trust (JNPT) is feeling the impact of the coronavirus (COVID-19) and vessels being taken out of service for scrubber retrofits.
Some mainline container vessels as well as feeders have skipped calls at JNPT as a fallout of the coronavirus outbreak, as well as a result of IMO 2020.
Gateway Terminals India (GTI), one of the five terminals operating at JNPT, has reported four “skips” already – vessels that were supposed to come to the terminal, but did not do so.
“GTI has told us that some more vessels may skip the port in coming months as they undergo scrubber retrofits to comply with the rule on using low-sulphur fuel oil,” JNPT chairman Sanjay Sethi.
These issues could hurt JNPT’s ability to handle more containers in the financial year due to end on March 31 this year, than it did in fiscal 2018-19. The port handled 4.625m teu between April 2019 and February 2020, compared to 4.673m teu during the same period in FY 2018-19. For the full FY19, JNPT handled 5.133m teu.
Ports of Los Angeles, Nagoya renew collaboration to focus on sustainable operations
The US port of Los Angeles and Japan’s Nagoya port have penned a memorandum of understanding (MOU) to further collaborate on operational efficiency solutions and environmental sustainability.
The new MOU outlines cooperation and exchange of information on port community systems and end-to-end supply chain information sharing platforms, development and deployment of zero-emission vehicles and equipment, as well as other activities connecting science, industry and start-ups that could contribute to both ports’ efficiency and environmental priorities.
“International cooperation among ports is essential to assuring that our global supply chain and ports of entry are the most efficient and environmentally sustainable as possible,” said Gene Seroka, executive director of the Port of Los Angeles.
The US port of Los Angeles and Japan’s Nagoya port have penned a memorandum of understanding (MOU) to further collaborate on operational efficiency solutions and environmental sustainability.
The new MOU outlines cooperation and exchange of information on port community systems and end-to-end supply chain information sharing platforms, development and deployment of zero-emission vehicles and equipment, as well as other activities connecting science, industry and start-ups that could contribute to both ports’ efficiency and environmental priorities.
“International cooperation among ports is essential to assuring that our global supply chain and ports of entry are the most efficient and environmentally sustainable as possible,” said Gene Seroka, executive director of the Port of Los Angeles.
“Furthering our collaboration on these priorities with the Port of Nagoya is a natural next step, given our long-term sister port relationship and mutual interest in advancing port innovations and technology,” Seroka said.
Operational efficiency projects of interest under the MOU include the development of port community systems like the Port Optimiser, the digital data platform used at the Port of Los Angeles to improve systems efficiency and supply chain information sharing. Another area of interest will be the Port of Nagoya’s centralised terminal operation system and centralised queuing gate process.
Environmental sustainability projects highlighted in the MOU include Nagoya’s innovative incentive system for LNG-fuelled and LNG-bunkering vessels, and the Port of Los Angeles’ current demonstration project with Toyota Motor North America that is testing hydrogen fuel-cell electric heavy-duty drayage trucks and container handling equipment.
The Port of Los Angeles and Port Authority of Nagoya already have 60 years of collaboration since 1959
US ports taking a major hit from the coronavirus
Supply chain disruptions due to the coronavirus (COVID-19) crisis have followed the wavelike spread of the disease, moving from Asia - notably China, but also South Korea - to the US.
Amidst a very muddy data situation, reports are suggesting that activity in Chinese ports has picked up, while the US ports are taking a major hit with reduced volumes.
At end February, Chris Connor, ceo and president of the American Association of Port Authorities (APAA) noted, in a prepared release, that, “The overall economic impact of this type of crisis can easily run into the tens of billions of dollars. Due to the coronavirus outbreak, cargo volumes at many US ports during the first quarter of 2020 may be down by 20% or more compared to 2019.”
Echoing the strands of good news coming from Asia, Connor added, “Things will rebound eventually, and indeed we’re hearing news about factories that are coming back on-line in China, and ports there ramping back up to move the cargo.”
AAPA also focused on an important aspect of the ports in preventing seaborne incursions of the virus, reminding ports of protocols for handling inbound vessels with crewmembers displaying symptoms of illness, saying: “Since ports are a nation’s first line of defense against threats ranging from terrorism to pathogens, they take their role seriously about protecting the safety and well-being of their communities.”
An AAPA representative explained to Seatrade Maritime News: “On March 2nd, AAPA held a conference call with the White House on this topic, and we believe the Coast Guard (USCG), Center for Disease Control (CDC), Customs Border Protection (CBP) and related federal agencies are doing an excellent job communicating what is being done and how to reduce the chances for infection, and what to do if someone suspects he or she, or someone else, is potentially a coronavirus victim.
“The DHS (Department of Homeland Security) representative on the call stressed that the USCG Captains of the Ports have complete authority on docking and dis-embarkment decisions, and they are responsible for being in touch with their local CDC to heavily inform those decisions.”
On the cargo side, Kenneth O’Brien, coo of the Gemini Shippers Association/Fashion Accessories Shippers Association (FASA), which represents leading movers of both inbound and outbound cargo in their dealings with the carriers, told Seatrade Maritime News that: “We have definitely noted decreased liftings from China which have prolonged the typical Lunar New Year seasonal drop due to the Coronavirus. We are beginning to see some signs of a return to a more normal volume state as workers begin to return to their jobs and factories resume operations.”
Gemini, representing cargo interests moving goods including fashion accessories, luggage, and footwear among a wide range of cargo categories, works through a joint venture with Seabury Maritime, an investment bank and financier specializing in port and logistics financial structures.
As the January 2020 teu throughputs were now being published by major ports- the 2020 numbers were uniformly down compared to 2019; West coast powerhouses Los Angeles and Long Beach were down by 5.4% and 4.6%, respectively. On the East Coast, the Port of New York / New Jersey, where the January statistics would be less affected by direct calls from China and S Korea, still saw teu volumes drop by nearly 1% in the same month on month comparison.
But O’Brien, from Gemini Shippers Association, pointed to the underlying strength in the US economy as a reason for optimism ahead, saying: “It will take a bit of time for full operations to resume, but we continue to believe that core US demand is relatively strong on the back of historic low unemployment and robust consumer demand.”
MOL head office staff working from home for two weeks
All staff in Mitsui OSK Lines (MOL) head office in Tokyo are working from home for two weeks as part of efforts to stop the spread of the coronavirus (COVID-19).
The “Work from home” program has been implemented for MOL officers and employees working in the company’s head office in Tokyo from 9 March for a period of two weeks until 19 March.
MOL will be using ICT tools to conduct meetings, including executive meetings, and all business trips have been postponed regardless of destination.
The company has also cancelled or postponed all meetings, gatherings, training program, and other events that bring together large groups of people.
All staff in Mitsui OSK Lines (MOL) head office in Tokyo are working from home for two weeks as part of efforts to stop the spread of the coronavirus (COVID-19).
The “Work from home” program has been implemented for MOL officers and employees working in the company’s head office in Tokyo from 9 March for a period of two weeks until 19 March.
MOL will be using ICT tools to conduct meetings, including executive meetings, and all business trips have been postponed regardless of destination.
The company has also cancelled or postponed all meetings, gatherings, training program, and other events that bring together large groups of people.
“MOL continually takes appropriate measures in line with the government’s policies, making its top priority the health and safety of customers, employees, and other concerned parties,” the company said.
Japan is reported to 483 cases of the coronavirus.
OOCL orders five 23,000-teu boxships at Cosco yards for $778m
Orient Overseas Container Line (OOCL) has ordered five 23,000-teu containerships at a total price of $778.4m from two Cosco shipyards in China.
Three of the newbuildings will be built at Nantong Cosco KHI Ship Engineering and the remaining two at Dalian Cosco KHI Ship Engineering, according to an announcement by Orient Overseas (International) Limited (OOIL), parent of OOCL.
“The size of the vessels together with the current vessels of smaller size would complete the fleet size of the group and would bring economy of scale to the group. The deployment of vessels will be able to strengthen the market position of the group and enhance the cost competitiveness of the group,” OOIL said in a statement to the Hong Kong Stock Exchange.
The newbuildings are scheduled to be delivered between the first quarter of 2023 and the early fourth quarter of 2023.
OOIL expects bank financing to cover about 60% of the contract price of each vessel, with the balance to be funded from internal resources.
“Should such bank finance not be arranged, the full contract price of each vessel would come from internal resources of the group,” OOIL said.
Both the shipbuildings Nantong and Dalian are indirect subsidiaries of Cosco Shipping Group, which in turn is the controlling shareholder of OOIL, making the latest deal a connected transaction.
“The shipbuilding contracts have been entered into for the purpose of improving the quality of service which the group provides to its customers. It is the view of the directors that ownership of the vessels will improve both the operation efficiency and profitability of the group,” OOIL stated.
(Source: Reuters, World Maritime News, American Shipper, Seatrade Maritime)
