FEATURE: Myanmar protests reduce imports as shipping lines suspend operations

Singapore — Shipping lines suspending operations at Myanmar ports due to widespread protests against the country's military coup has dampened physical trading activity, caused container shipment delays and significantly reduced imports, trade sources said March 16.

The widespread street protests have put pressure on the logistics sector, with container trucks halting operations, resulting in container cargoes remaining stuck at shipping ports.

"CMA CGM has suspended new booking acceptances for all inbound shipments into Myanmar since Feb. 20 and from March 8, all employees have worked from home until further notice," said Mohammad Bilal Khan, a container expert based in Pakistan.

German carrier Hapag-Lloyd has also suspended import bookings from Myanmar until further notice, although Yangon Hapag-Lloyd was taking export orders, Khan added. Maersk had also released a similar advisory announcing the suspension of all vessel operations in Myanmar and has yet to update on whether this would be extended, he said.

Logistics challenges

"Destination sales have been really weak. There is not enough labor at Myanmar shipping ports because of the protests and we can't move containers to destination," a Thai-based trader said.

Some regional trading houses have taken a conservative approach by either calling off trades or postponing container shipments to Myanmar.

"Initially we had 20 containers to sell [to Myanmar] but our headquarters did not agree as it was too risky. Luckily we managed to change the destination," a source at a Japanese trading house said.

A Hong Kong-based trader said the company has rescheduled shipments to May and remained uncertain about the situation for container discharging operations in the country.

"Shipments from Thailand to Myanmar have been obstructed by the suspension of services. Most of the trade is being handled by trucks now," a Thai-based source said.

However while trucks were available, roads were closed, as were banks, so trading was significantly affected, the source said.

Import impact

The upheaval in Myanmar comes at a time when Asian container markets were already facing disruptions due to a shortage of containers and severe congestion at ports.

Container rates for intra-Asia trade lanes have surged almost fourfold since last November and shippers are also shifting from ocean freight to inter-modal transportation, via truck and rail, to increase reliability and ensure delivery, market sources said.

Traders said the closure of banks in Myanmar has also created difficulties, particularly for executing payments in US dollars.

"Banks are closed and it is difficult for buyers and traders to transact. We are facing difficulty in conducting trades with our Myanmar buyers," a Singapore-based trader said.

Myanmar is one of the 10 largest importers of Thai white and refined sugar, purchasing 115,589 mt in 2020, but several sugar traders said they expected the closure of factories and weaker end-user demand in Myanmar to reduce demand for Thai sugar imports in the current year.

Despite lower sugar production in the 2020-21 marketing season, Thai physical cash premiums have been on a downtrend due to weaker demand from China, Vietnam and Myanmar.

Thai 45i refined sugar for prompt shipment was assessed at a premium of $51/mt to the London No. 5 March futures on Feb. 11, an eight-month low; it was last assessed at this level on June 24, 2020. The premium was most recently assessed at $54/mt over May futures on March 15.

"Now that many factories in Myanmar are shut and they have no idea when they will reopen, there is no point for them to import Thai sugar now," a Hong Kong trader said.