February 10, 2020 – With the global coronavirus continuing its spread, Canaan Transport urges patience as cargo rates will be on a roller coaster ride in the next few months. Despite ocean carriers discounting container spot rates from Asia this week, there was still insufficient cargo to sustain the already reduced alliance service networks. Maersk and MSC were obliged to cancel this week’s 2M AE7/Swan loop from China to North Europe at the last minute after they were unable to secure enough cargo. This follows the announcement in the week by the 2M of a further void sailings to the Mediterranean and on the transpacific, together with a number of other westbound cancellations by the Ocean and THE alliances. The Shanghai Containerized Freight Index (SCFI) was not published again this week as the impact of the coronavirus outbreak in China shuttered many offices and businesses, with some not resuming until 17 February. However, the Ningbo Containerized Freight Index (NCFI) did publish last week, showing spot rate erosion across all its main components. On the other hand, air freight rates out of China could leap by 300-400% once production is fully back online and before belly traffic returns to the country. While manufacturing is unlikely to hit full capacity soon, factories are expected to reopen this week – which comes as bellyhold capacity out of the country has almost dried up. The supply chain storm will come when production ramps back up and the industry begins to feel the impact of belly capacity withdrawal, which we know won’t return before April at the very earliest.