Juergen Pump, Hamburg Süd’s president for North America, provided a “put yourself in my shoes” scenario for shippers during the Agriculture Transportation Coalition (AgTC) annual meeting this week.
Certainly canceled sailings are a headache for shippers and there have been a lot of them during the coronavirus crisis. But Pump pointed out that a rise in canceled bookings creates pain points for ocean carriers.
“Booking cancellations have increased significantly. Traditionally about 15 to 18% of all export bookings are canceled. In week 20, 29% of all our export bookings were canceled. The high-water mark was in week 18 — 40% of all export bookings were canceled,” Pump said.
He explained that for the container lines, the rash of canceled shipments “puts planning at a new level, if you will. In other words, we are scheduling departures, allocating space, making sure equipment is available, yet we are facing significant cancellations. This is clearly a response to COVID as a lot of customers are dealing now with canceled purchase orders, warehouses that are full at destination ports. It’s adding another level of complexity to our operation, and the fallout from this potentially is also that empty containers will have to be moved overseas rather than waiting for an export booking.”
This week’s two-day AgTC annual meeting was held virtually because of the coronavirus pandemic and although he could not see the audience, Pump made a request. “If you need to cancel a booking, please do it as soon as you are aware of it, allowing us to redeploy containers and not have empties clog up the ocean terminals.”
Canceled sailings have helped create some of those clogs.
“Between April and July, 80 sailings have been canceled or will be canceled between the West Coast and Asia and 43 departures to Asia will be canceled off the East Coast. So COVID had an immediate and significant impact on the global liner network,” Pump said. “This is only trans-Pacific. There are other cancellations on the trans-Atlantic down to South America and also to Australia, so [there have been] significant changes to the network, which also has quite an impact on the cargo volume.”
Like their customers, the shipping lines have had to change the way they do business in a world fighting the coronavirus pandemic.
“Another fallout from COVID-19 … is a complete disruption of empty container flows. Ports and locations that were traditionally surplus are running short at times. Some locations that were traditionally demand areas, the surplus is actually quite significant. So as ocean carriers we have to relearn equipment flow and make sure we have the right equipment in the right location at the right time,” Pump said.
“Information flow is critical. We have started to put out a twice-a-week operational update for our customers that will tell you about equipment shortage concerns in various locations,” Pump said. “In return we would ask our customers to let us know when an export booking will not be filled so we can dispose of the container or at least try to find another export booking for that space.”