The effect the corona epidemic has on the output of Chinese factories and the export of goods from China into other parts of the world is undeniable. The beginning of a noticeable shortage of new and used shipping containers is to be expected in the second half of 2020. This will lead to container prices increasing. If you already know you’re going to need a certain type of container later this year, it might make sense to stock up now.

Combating the spread of the coronavirus

The first reports of people having contracted the new coronavirus in China came in December 2019. The virus has spread rapidly all through China by way of droplet infection. The Chinese government has taken drastic measures to combat the quickly spreading disease. Heavily impacted cities and regions have been cut off and traffic reduced drastically or stopped entirely. All of this affects the mobility of the Chinese people. Many factories have been ordered to close down temporarily while the Chinese New Year has been extended by several weeks. Some factories have started work again mid February with a very small amount of employees. Experts expect the lull in the production to last for another couple weeks. It is still uncertain when production in China will be back to its full capacity.

Coronavirus having a major impact on the shipping industry in China…

Impact on production and transport

With production only slowly starting again, orders from Europe and North America will take much longer than usual to ship. Companies around the world, which rely on a steady supply of parts and semi-manufactured products from China, will feel the negative impact of this.  Existing buffer stock might be able to bridge the time, but if this disruption lasts longer, there is a real danger of substantial losses and production stops. The reduced output from China directly impacts the export of goods. Many large shipping companies have already cancelled or at least reduced their regular scheduled services. The shipment of time-sensitive parcels is also affected due to flight cancellations. To make up for lost time, transport via the Silk Road from China to Europe will probably become more relevant again. Train transport takes an average of 2 weeks versus the 4-5 weeks of maritime traffic.

… complete contrast – fully loaded ship leaves Hamburg

Impact on container prices

New container trade is attuned to a 4-6 week production stop around the time of Chinese New Year. This break has been now been extended by several weeks in the factories. But even those factories that have once again started up their assembly belts are miles away from their usual output. Too rigid are the restrictions on travel and transport traffic and the quarantine laws. No exports from China also result in reduced availability of new and used containers in sales markets all around the globe. What has been produced already will most likely be able to meet market demands until late spring. However due to the aforementioned factors affecting container production and the export of goods, it is unclear when anything will arrive at its destination after the Chinese New Year. Delays of several months are possible, which would lead to a drastic shortage within the container market. A distinct price increase seems unavoidable. If you already have a specific need, especially for special equipment, it might be good to stock up now to avoid supply shortages. We are already noticing a price increase and it is not certain how prices will develop in the coming months.

If you have any questions, get in touch with our sales team – we’re happy to help.