Coronavirus update 12th Feb

This update incorporates news, local insights from partners and carrier notices and includes the latest factory, transport and economic developments.

All China ports are operational, but subject to workforce and capacity constraints. Wuhan port remans closed.

Post-holiday return to work in China

• The 10th February target date for factories to reopen has passed, but local authorities have maintained current restrictions in a number of areas; many businesses have also elected to delay the return to work due to concerns over staff safety
• Offices and factories are subject to on-going controls across the mainland, with a backlog in local authorities approving permits to resume work; this has widespread impacts on industrial production; some estimates report that only 20% of factories have successfully resumed production
• People are still subject to travel restrictions and major city lockdowns remain in place as part of viral transmission control measures
• City lockdowns and travel restrictions are preventing workers from travelling back to their workplaces after the extended holiday season
• Chinese haulage is subject to delays resulting from road transport restrictions including driver temperature checks, vehicle disinfection, local quarantine measures, congestion, etc.
• Throughout the local supply chains in China, constraints resulting from limited manpower to turn around shipments and transfers are impacting warehousing, trucking, cargo stuffing and associated functions

Impacts on air and sea freight

• Container vessels have been subject to scrubber retrofit requirements, reduced demand over the Chinese New Year, and now the additional impacts of the Coronavirus epidemic
• These combined factors have led to large proportions of vessels remaining inactive, with some estimates assessing inactive fleet capacity at 1.4m – 1.6m TEUs
• Reefer plug shortages are being reported at many Chinese ports, and docks running out of container storage capacity; some shipping lines are proposing congestion surcharges and re-routing to alternative ports for trans-shipment
• Chinese production activity is expected to ramp up during February and March, driving increased export demand in March and April which will put further pressure on air freight capacity
• In consideration of the above factors, it is anticipated that carriers will look to offset their reduced revenues by revising rates and implementing peak season supplementary charges, congestion charges, etc.
• We are liaising with our partners to ensure any such proposals are monitored and proactively mitigated as far as possible

Economic impacts

• The current drop in Chinese export demand is leading to increasing numbers of blank sailings, threatening supply chains between Europe and China
• Industry analysts believe ocean carriers could be losing up to $350m per week due to the Coronavirus epidemic and its fallout across global trade
• Some shipping lines are reporting shortages of certain container types due to both European weather conditions and coronavirus; with the fall in shipments from China to Europe this situation is not likely to improve in the short term
• In some cases, vessels are being held in Europe until the demand in China picks up after the extended Chinese holiday period
• Cancelled sailings from China are expected to cause capacity shortages on backhaul shipments in the coming weeks

Our focus remains on sourcing creative, pragmatic solutions that ensure any impact on our customers’ supply chains is minimised as much as possible. 

We are working closely with our extensive network of ocean and air carriers, as well as our overseas offices and dedicated teams, to keep your goods moving.

We are happy to respond to any questions or concerns you may have, so please don’t hesitate to contact us at any time.