Russbroker Caribbean market review

Last Updated on 11 June 2020

Smaller ships suffer but not only due to Covid-19

Container Market

The Corona crisis was the all-dominating topic in early 2020. Firstly, feeder cargo volumes experienced their normal dip in February due to the Chinese New Year festivities. The prolonged shutdown in China however then leads to a much larger dearth in cargo than usual, as Chinese port TEU throughput figures in January and February were about 10% lower than the year before.

Once the coronavirus then hit the rest of the world and lockdown measures were implemented pretty much everywhere, intra-regional cargo volumes started to drop as well. Although the situation has improved in Asia and economic activity has restarted, a third “wave” of shrinking TEU numbers will occur starting at end of April as more than 250 regular sailings ex Asia are cancelled during the second quarter 2020 as a consequence of the globally very low consumption and production. As operators started to cut sailings and even whole services, surplus container tonnage began to build up. By the end of April about 70 ships in the size range of 500 to 2,000 TEU had become unemployed in the Atlantic.

Apart from coronavirus, the main theme in the Americas in early 2020 had been service upsizing. With anticipated, and early on also materializing higher fuel costs due to the IMO 2020 regulations, many operators tried to bring down their slot cost by increasing the vessel size deployed. Two main liner operators, for example, combined their West Coast South America feeder loops which allowed them to replace four ships (1,300 TEU, 1,700 TEU and 2x2 200 TEU) by two much larger ships (3,500 TEU and 4,000 TEU).

One Transatlantic fruit service, which had stretched all the way to St. Petersburg for years, was cut short. The ships now already turn in the Antwerp-Hamburg range, which allows for deployment of 3,500 TEU ships without ice class instead of using smaller 2,500 TEU ice-class ships needed to go into the Baltic all year round. Several 1,100 TEU and 1,300 TEU ships were also displaced by larger 1,700 TEU ships.