Already, port calls to China are becoming less frequent, as fear of catching the coronavirus and a slowdown in the Chinese economy have deterred cruise liners, container ships, oil tankers and bulk carriers alike from stopping at the country’s harbours.
Commercial vessels have stopped arriving, with port calls falling by an estimated 30 per cent in February, and container throughput estimated to decline by between 20 and 30 per cent, according to Clarksons – a shipping research company.
Seven of the world’s 10 largest container ports are in China, including Hong Kong.
Apart from the delivery delay, China’s vessel owners and shipping lines are facing difficulty finding crew, as sailors and officers from mainland China must follow quarantine regulations that apply at every port call, adding complexities and delays.
China is the second-biggest source of maritime crew, behind only the Philippines, and ahead of India, Greece and Eastern Europe, according to data by the Hong Kong Ship Owners Association (HKSOA).
The world’s second-largest economy, China accounted for 14 per cent of all containerised cargo exports last year, 23 per cent of seaborne crude oil, 35 per cent of dry bulk shipped, 18 per cent of liquefied gas and 72 per cent of all seaborne iron ore.
That has taken a drastic turn, as the coronavirus outbreak gathered pace in February. Crude oil tankers have stopped sailing for China since the start of the month, compared with 3.42 billion ton-miles every day on average last year, according to satellite data provided by Vessels Value.
Shipments from the Middle East, China’s largest source of the commodity, were 280 million deadweight tonne cargo miles on February 5, a mere 12 per cent of the 2.32 billion DWT-mile shipped on the same day in 2019, according to shipping analytics firm Drewry, who note that global freight rates dropped 4.1 per cent in the second week of February, declining another 5.8 per cent this week.
That would put significant “stress” on port revenue if the low volume continues beyond March, because most European and Middle East ports have significant exposure to China, according to Fitch Ratings Agency.
Many of the world’s largest container shipping lines, including the Mediterranean Shipping Company (MSC), AP Moller Maersk, CMA-CGM and Hong Kong’s own OOCL have all cancelled their cargo routes from Asia to Europe and North America in recent weeks.
The shipping industry has already struggled with the switch to low sulphur fuels as mandated by IMO 2020, which prohibits sulphur exhaust. Uncertainty about the availability of low sulphur fuels and their cost has led to a number of cargo lines to fit their ships with “scrubbers”, which remove sulphur from ship’s exhaust. Clarksons estimated that 77 per cent of all such refits were being done at Chinese shipyards.