V is for recovery

Container ships move the vast majority of manufactured goods sold globally and shipping executives anticipate volumes declining more than 10% this year due to the continuing Covid-19 crisis, which is a greater decline to the aftermath of the 2008 financial crisis.

Metro work very closely in partnership with ONE, as one of our key strategic carriers across the globe. In a recent interview Jeremy Nixon CEO of Ocean Network Express (ONE) the container shipping company formed in 2016 by NYK,, Mitsui and K Line, outlined his view of the pandemic’s impact and the shipping sector’s outlook for recovery.

When the pandemic struck China container shipping suffered a supply shock, as a production shortage gripped closed factories, now we face a countering demand side shock which is impacting North America and Europe with the lockdowns across both continents.

The experience of watching how Chinese terminals handled the outbreak and the automation at Western ports has helped prevent the serious bottlenecks many had feared and operations have been maintained, with some off of efficiency as working practices changed.

China makes up 30% of ONE’s global business and the 25% reduction in volumes and sailings in March led to a 15% contraction in business globally. A figure that will be surpassed in April.

Purchasing and shipping patterns have changed, as lockdowns triggered changes in consumer buying behaviours, with demand soaring for household goods and a sharp fall in demand for others.

Mr Nixon CEO of ONE, is hopeful that the V shaped recovery that saw global inventories and freight rates recover after four months in 2010, will be repeated when the Covid19 pandemic subsides.

Even if there is a V shaped recovery Mr Nixon expects this recovery will take longer.

The lockdown enfaced changes to working practices are, Mr Nixon believes, particularly profound.

With cloud-based systems the move to home-working has been relatively painless and – with ONE moving toward digitalisation – is helping to accelerate that eventuality.

Asked whether the fall in oil prices undermined the case for Ultra-Large Container Vessels (ULCV) Mr Nixon was confident that the economic benefit for shippers, in lower unit costs, remained, though operating them as a consortia remain critical to successful management.

ONE Aquila by kees torn is licensed under CC