Freight & Trade Alliance (FTA) provide the following update for members / industry on the coronavirus situation.
It has been over two months now since the first case of "coronavirus" was detected in the city of Wuhan in the Hubei province of mainland China. As the months, weeks and days have passed we have seen the growth of cases, unfortunately deaths, around the world. The health impact is a global community concern and many around the world are contributing to both managing the current situation and finding an antidote for the virus.
There is of course also a global supply chain / economic issue happening at the same time that has been fueled by the fact that this outbreak has come on top of the Chinese New Year (CNY) when many workers within China travel domestically and internationally to visit relatives and friends and now find it hard with internal travel restrictions to get back to their home cities.
The "official" return to work dates as we have seen are varying from city to city, province to province, and even then we are seeing workers unable or not wanting to return to work for fear of still contracting the virus. Factories that are staffed, in many cases, do not have a full roll call and quite possibly do not have the raw materials to commence manufacture. Transport companies are short of staff thereby creating a lack of trucks to transport goods that are available. Ports are congested, reefer plugs in many ports are full and containers are being diverted to other ports to remain on power and surcharges have been applied by some shipping lines to cover these costs.
Our ongoing conversations with members and the wider industry are confirming that a "return to the norm" is some months away, some have suggested September or longer until both a full return to productive work and sufficient supply chains are in place.
Companies globally are trying to source goods from other parts of the world and those suppliers will not be able to fully address all requests so shelf stocks will slowly start to reduce.
In an article in today's Financial review by Ambrose Evans-Pritchard (International Business Editor of The Daily Telegraph, London) "The dominoes are toppling through the whole chain" looks at the impacts on the global supply chain with some interesting quotesLars Jensen, from SeaIntelligence in Copenhagen, said the loss of traffic was running at 300,000 containers a week. This would cause a logistical crunch in Europe in early March even if the epidemic is brought under control quickly.
"The dominoes are toppling through the whole chain. When ships don't leave port in China, they don't stop to pick up cargo in Hong Kong, Saigon, or Singapore either. Freight rates are in free fall," he said.
Refrigerated ships full of frozen food – known as "reefers" – are unable to enter Chinese ports because the berths are taken and they cannot tap into electricity chargers. Meat supplies are spoiling at sea.The US Agriculture Transportation Commission said the Pacific supply chain had been badly "compromised" and logistical headaches were building up at US ports. There will soon be an acute lack of containers in both American and European ports.
Mr Jensen said European factories were already feeling the shock. "The first hit is the auto industry as it has a very tight supply chain. Companies are having to airlift in supplies from Asia, which is extraordinarily expensive," he said.
So as we head into the weekend, and another "return to work" date of February 24 on the horizon we wait to see what changes Monday will bring.
Please note the below links that provide global overviews of impacts on both Air & Sea cargoesFURTHER INFORMATION
FTA suggest members / industry maintain close relations with their forwarders , agents , shipping lines, suppliers and clients in China to ensure they have the latest information available.
To stay abreast of all developments and general information concerning the Novel Coronavirus we suggest members maintain a watching brief on the Department of Health website
FTA will continue to monitor issues surrounding the coronavirus and keep members updated as necessary.