Forex Sky Eye APP News: Global container shipping companies have canceled more than 160 voyages in the past week, trying to maintain freight levels as declining trade demand may cause huge losses.
According to Sea-Intelligence ApS, a consulting firm based in Copenhagen, the number of cancellations of shipping services increased from 45 last week to 212. This trend indicates that summer demand may be generally sluggish. Shipping companies that transport most manufactured and retail goods around the world expect the economic impact of the new crown epidemic may continue until the peak transportation season.
Sea-Intelligence expects some of the world's largest shipping companies to lose between $800 million and $23 billion this year, depending on how these companies deal with the economic impact of the pandemic-related mass lockdown measures.
So far, shipping companies have appeared to be relatively moderate in financial impacts compared to airlines and other passenger-dependent transport operators. But as major economies struggle, enterprises suspend operations, factories stop production lines, and unemployment increases sharply, shipping companies are also reducing services. As shipping capacity gradually exceeds demand, Denmark's Maersk Line, Switzerland-based Mediterranean Shipping Co. and Japan's Ocean Network Express Pte. Ltd. are trying to prevent a sharp drop in freight rates. "This storm is still developing," said Lars Jensen, CEO of
Sea-Intelligence. "The challenge will be to manage shipping capabilities carefully in the future to prevent freight rates from collapsing."
Jensen said that if shipping companies launch a full-scale price war, as it did after the 2008 financial crisis, the industry could have a loss of $23 billion. At that time, freight rates fell to a level that could only afford fuel costs.
