Two-thirds of European ports report falling ship calls as pandemic triggers sharp contraction in global supply chains
By May 18, 2020 12:25 pm ET
European ports have been the world’s hardest hit trade gateways from the coronavirus pandemic, with up to two-thirds reporting significant declines in ship calls this month in a sign of the deep contraction in global supply chains.
The International Association of Ports and Harbors said in a report that in the first week of May around 65% of big European ports saw up to a quarter fewer ships coming in, compared with the average at this time of year.
Around 40% of ports outside Europe, including those in the U.S., saw a similar decline in port calls over the same period.
The reduced port calls come as container ship lines have sharply cut back on sailings out of Asia, scaling back capacity on the Asia-Europe and trans-Pacific lanes that are the backbones of global trade.
Shipping and port executives expect canceled sailings to peak in June and then start falling if the pandemic stops spreading and lockdowns continue to be relaxed. Container ships, car carriers and industrial dry-bulk vessels have been the hardest hit as manufacturing plants and auto factories continue to be rattled, while passenger numbers on ferries and cruise ships remain at record lows.
“In the coming weeks, several of the larger ports anticipate significant downturns in volumes due to blank sailings especially in the container and car moving segments,” said Theo Notteboom, a professor of port economics at the University of Antwerp in Belgium and a co-author of the report that was released on Friday.
“The larger hubs like Rotterdam, Hamburg, Los Angeles and New York will be impacted the most but are also expected to recover the fastest, as was the case after the 2008 financial crisis,” Mr. Notteboom said.
The study covered a total of 76 ports.
The figures paint a bleak picture of supply chains that have been roiled first by greatly diminished supplies from China after the country shut down a swath of its manufacturing sector in February to contain the spread of the virus and then by lockdowns in Western countries that have decimated consumer demand.
Retailers in the West have canceled large numbers of orders from Asian suppliers as a result, particularly from apparel providers.
“With global container volumes down overall between 8% and 10% and imports from Asia down between 10% and 15%, European and North American businesses are operating on survival mode to preserve cash, often suspending transit requests for goods already on their way,” Mr. Notteboom said.
Vessel operators are dropping scheduled sailings in a bid to conserve cash and maintain freight rates.
Denmark-based research group Sea-Intelligence LLC said Monday that canceled container ship sailings from Asia to Europe are up 350% from the average at this time of the year, while voided journeys to U.S. gateways on the West and East coasts were up 280% and 300%, respectively.
Port of Los Angeles Executive Director Gene Seroka said last week that activity in the country’s busiest port was at 80% compared with normal levels, after an 18.5% year-over-year drop in container volumes in the first quarter.