Coronavirus puts the brakes on global shipping container industry

Coronavirus puts the brakes on global shipping container industry

The spread of coronavirus is having a significant impact on the global shipping industry. The delivery of shipping containers to Europe has been suspended temporarily, and trading routes have been disrupted as countries take measures to protect their ports. 

APRIL 2020 (UPDATE)

The UK has now been in lockdown for over a month in an effort to contain the spread of coronavirus (COVID-19), and it’s set to continue until May at the earliest. While some countries are slowly beginning to lift their own restrictions, it will likely be many weeks or even months before things return to anything like they were before the pandemic.

These preventative measures, while no doubt necessary, have had a significant effect on global business, not least the shipping industry. As we have previously discussed (see MARCH 2020 below), with the pause in the production of containers in China and the slowdown of global shipping, the industry has already taken a significant hit.   

As of mid-April, 384 sailings have been cancelled, with the first half of 2020 potentially looking at a 25% fall in shipping, according to Sea-Intelligence.    

So what effect will coronavirus have on the shipping industry for the future?

While making predictions can always be tricky – especially whilst still in the midst of a pandemic – the signs that the shipping industry is recovering are there. 

China, for example, has resumed sailings from its ports this month, which is significant considering that it has seven out of the world’s top 10 busiest container ports. It has also reopened its factories to continue shipping container production, which, as the producer of 90% of the world’s containers, will help meet the world’s inflated demand. 

With practically no cargo moving by air, in the short term, shipping will be relied upon even more to supply global trade. According to analysts, however, the drop in demand across Europe and the US will have a longer-term impact.   

According to Nick Chubb, founder of maritime innovation intelligence company Thetius, “We could be talking a decade, at least, of difficulty”. 

MARCH 2020

Shipping containers from China 

China accounts for approximately 90% of the world’s ISO container production. The manufacture and transportation of these containers has however been suspended due to the risks of spreading coronavirus. 

So far, China has shut down all container factories for the foreseeable future. This is mostly to reduce the spread of the disease but also due to of staff shortages. 

Shipping lines and ports have also remained closed since the outbreak in February. The last delivery of shipping containers from China to the UK arrived last week and no guarantees have been given as to when supplies will re-commence. 

Shipping container price

This interruption in the supply of shipping containers coming from China coupled with their sustained demand has led to a marked increase in the price of shipping containers. 

“We’ve seen the price of containers in the UK go through the roof in recent days,” explained George Bowden, Operations Manager at Unit Hire. “There has already been around a 20% increase in the price of containers since the coronavirus outbreak. We expect to see the average price of a container top the £2,000 mark within a week or so.”

The price of shipping containers was already on the rise before the coronavirus outbreak. Container factories had already increased their prices for March/April production onwards as a result of the increasing cost of corten steel. The current production shortage will only inflate prices further over the coming weeks and months. 

Coronavirus and shipping 

This comes as coronavirus wreaks havoc on established shipping routes around the world. According to ship-technology, 61 shipments have already been cancelled on the Asia-Europe since January – representing a reduction in capacity of 151,000 tonne equivalent units (TEU). 

This reduction is the result of both decreased manufacture in China and individual nations taking preventive measures at their ports. 

Coronavirus and UK ports 

As it currently stands, all ships arriving to the UK from foreign ports must submit a Maritime Declaration of Health, including details of potential cases of coronavirus. If any cases are flagged to port authorities by incoming vessels, then the normal procedures for dealing with infection disease outbreaks are followed.

The risks of coronavirus arriving in the UK via ships directly from China is relatively low. As Richard Ballantyne, Chief Executive of the British Ports Association noted, ‘It typically takes between 30-40 days to sail from China so any crew who develop the virus should do so in this time.’ 

A greater risk is posed from ships arriving from the ports of other European countries, where coronavirus is already present. 

Italy currently has the highest recorded number of coronavirus cases in Europe.  

There are no specific rules in place that limit trading ships from Italy to the UK – the normal precautions relating to infectious disease apply regardless of the origin of the ships. 

Refurbished shipping containers to the rescue

As no new shipping containers are currently being imported, people are turning to used and refurbished containers already situated in the UK. This increase in demand has again led to inflation in the price of used and refurbished containers, which will likely continue to increase until fresh containers can be sourced.   

As used and refurbished containers can come in a variety of conditions, it’s crucial that you obtain the best possible quality, especially if you intend on using them for haulage or for conversions. That’s where Unit Hire can help…

If you’re currently looking to buy or rent shipping containers, take a look at what Unit Hire has to offer. All of our containers meet stringent industry regulations and are safe to use for a range of purposes. Get in touch with us today.

27.02.2020
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