Shipping companies have canceled a quarter of sailings to the port as the impact of the outbreak in China affects business operations across the Pacific
The largest U.S. gateway for seaborne imports from China is projecting a 25% drop in container volumes this month as the economic impact of the coronavirus spreads across shipping operations far from the outbreak.
Container ship operators have canceled 40 sailings at the Port of Los Angeles between Feb. 11 and April 1, mostly for vessels coming from China, port Executive Director Gene Seroka said in an interview. That amounts to a little more than one-quarter of the overall number of ships that would typically call at the port during that time, he said.
As Chinese business shutdowns extended past the traditional Lunar New Year holiday into February, and workers stayed home from factories and ports, “it became pretty clear…that we were looking at something much bigger than maybe some had thought,” Mr. Seroka said.
“The first quarter of this year, I project that we’re going to be down 15% year-over-year, with a heavy bit of that related to the coronavirus,” he said. The decline has accelerated, he said, with February cargo volumes expected to be down 25% from the same month a year as the epidemic’s impact ripples through supply chains.
Los Angeles handled the equivalent of more than 705,000 containers last February, so the projected decline would mean about 176,000 fewer containers moving through the port this month. About 9.3 million boxes passed through the port in 2019.
Shipping volumes out of China have plunged as the shutdowns in the wake of the outbreak crimp industrial production, with ocean carriers warning that canceled trips will take a toll on earnings. A.P. Moeller-Maersk A/S, the world’s biggest containership operator, has canceled more than 50 sailings from China to the rest of the world since late January.
The volume of loaded containers arriving at the neighboring ports of Los Angeles and Long Beach, which together handle nearly 38% of U.S. container imports, fell 3.9% in January from the year before. Measures aimed at containing the spread of the virus have contributed to logistics bottlenecks, according to Resilience360, which monitors risk and disruptions across supply chains.
“Yard congestion has also built up at ports across China due to the lack of port workers and truck drivers picking up containers from the ports,“ the organization said in a Feb. 13 report. “In Shanghai, only about half of the staff that usually load and unload cargo was reportedly back to work on February 10.”
The steep drop-off in trans-Pacific container volumes at the Port of Los Angeles means that empty containers are piling up and a backlog of exports is building. As manufacturing operations in China kick back up and cargo shipments resume, “it’s going to be kind of a big pendulum swing,” Mr. Seroka said.
The U.S. Coast Guard said earlier this month that cargo ships will be allowed into U.S. ports even if they have been to China within the previous 14 days as long as they have no sick crew members. But crew members would have to remain on their vessel “except to conduct specific activities directly related to vessel cargo or provisioning operations.”
The Coast Guard said it would bar passenger vessels or ships carrying passengers that have been in mainland China within 14 days from entering U.S. ports. Under the order, passenger ships arriving that had stopped in China will be allowed to enter the U.S. if it has been more than 14 days since any passengers have been in China and if all passengers are symptom free.
Source: Wall Street Journal