Rotterdam Forecasts Large Volume Impact from COVID-19 and Port of Rotterdam Authorities stated that the global disruption of supply chains is not the only thing affected by these exceptional conditions. But are not the only ones.
Rotterdam: First Quarter Effects of COVID-19
Rotterdam has already warned that disruptive effects are likely to be seen throughout its supply chain by announcing a 10% to 20% drop in container volume due to the Coronavirus pandemic. This is a devastating prediction, but Rotterdam is not alone in making it. Their closest rival, Antwerp, announced that they saw a 9.5% drop in Q1 volume and they will invariably prepare for a volume shock in Q2 due to increasingly stringent measures to combat the Coronavirus.
Rotterdam is the busiest container port in Europe and has already reported a decline in throughput in its first quarter of 4.7%. The port regularly has 3.5 million TEUs in transit, but in the first three months of 2020, it is down 174,000 TEUs compared to the same period last year.
The drop during the first quarter was caused by the disruption of production and supply chains, restrictions on the movement of people, the subsequent tightening of border controls and factory closures. Measures similar to those currently facing most ports around the world.
Regarding the total tonnage handled during the first three months of this year, Rotterdam’s throughput fell by 9.3% compared to last year, where it was 123.8 million tons, but this year it was only 112.4 million tons. It is important to note that approximately half of the containers that pass through Rotterdam come from or go to Asia.
This 9.3% drop in performance is almost the same as that recorded in Antwerp. Freight growth in Rotterdam is also slowing down. Increased competition throughout Northern Europe is a direct consequence of this drop. Cargo growth fell by 5.7%, hovering around 14.8 million TEUs. Rotterdam notes that one of the main factors they attribute to this fluctuation is weakening economies across Europe, as well as declining trade with Asia.
While we can easily say that what is happening is a direct result of these economic changes, these economic changes are themselves a direct result of the Coronavirus. The economic downturns that are taking place around the world are just beginning in places like Europe and America.
industry recovery
Nations everywhere are waiting for an end to stay-at-home measures to stop the spread of the Coronavirus so that economies can revive. Ports across China have experienced a further decline in throughput compared to their European and US counterparts. Factory closures and travel restrictions in China have significantly hampered volume at ports. Recently in the month of March, the Chinese ports became fully operational after dealing with the Coronavirus, but now the impact of the Coronavirus is spreading throughout Europe and America. Ports around the world are unlikely to see a rapid improvement in volume any time soon. Carriers have already planned large withdrawals of their capacity for the coming weeks with many departures canceled around the world, an average of 25% in fact. It is estimated that these canceled departures will generate additional volume losses until the end of June. A very slow and gradual recovery is more likely to take place. The high cost of the pandemic on the global economy will limit the possibility of a massive rebound that everyone expects to happen.
Tips for chargers
Shippers should follow the advice of the Rotterdam Port Authority and recognize that although these times are challenging and everyone is seeing substantial drops, this is just the beginning. Economies will continue to face strategic problems regarding the shipping industry. There are three global scenarios forecast through 2021 that will affect shippers. This includes the best case, the base case, and the worst case.
There is a 20% probability for the best scenario, 50% for the medium scenario, and 30% for the worst. In terms of the overall continued spread of COVID-19 in global economies and shipping demands, the best-case scenario indicates that the virus will peak and subside over the next two months. The baseline scenario states that it will peak and decline over the next four months in the Northern Hemisphere, but then gradually fall in areas that have not yet peaked. The worst case scenario is that the virus will reappear in different regions, without a clear forecast of when it will decline.
Shippers should follow the advice of the Rotterdam Port Authority and recognize that although these times are challenging and everyone is seeing substantial drops, this is just the beginning. Economies will continue to face strategic problems regarding the shipping industry. There are three global scenarios forecast through 2021 that will affect shippers. This includes the best case, the base case, and the worst case.
There is a 20% probability for the best scenario, 50% for the medium scenario, and 30% for the worst. In terms of the overall continued spread of COVID-19 in global economies and shipping demands, the best-case scenario indicates that the virus will peak and subside over the next two months. The baseline scenario states that it will peak and decline over the next four months in the Northern Hemisphere, but then gradually fall in areas that have not yet peaked. The worst case scenario is that the virus will reappear in different regions, without a clear forecast of when it will decline.
Source: Shiplilly
