Coronavirus delaying normal post-CNY trans-Pac flow to March
Bill Mongelluzzo, Senior Editor | Feb 10, 2020 2:57PM EST
Logistics experts predicted Monday that delays in resuming China’s factory production and inland transportation supply chains due to the deadly coronavirus will push the return of normal post-Lunar New Year Trans-Pacific cargo flows to late February or early March.
Furthermore, carriers over the weekend announced an additional 21 blanked sailings, which means that beneficial cargo owners (BCOs) now face at least 82 blankings through February and into March, with additional canceled sailings possible.
Although China’s government initially extended the Lunar New Year factory shutdowns until Feb. 3 for much of China and Feb. 10 for the Wuhan-Hubei province region in a bid to stem the spread of the virus, sources indicated those deadlines have slipped.
“From what I’ve been told, most of the factories may only resume normal working around Feb. 17,” Paul Tsui Hon-yan, managing director of Hong Kong-based logistics company Janel Group, told JOC.com.
Additionally, before factories resume production, they must submit a plan to authorities detailing precautions they have implemented to prevent the virus from spreading. “That means the actual date of resumption of operation could be delayed by a further two or three days,” he said.
The closely intertwined warehouse, trucking, and factory logistics chain is struggling with a shortage of workers, which is delaying the resumption of operations, let alone full production, said Jon Monroe, who represents non-vessel-operating common carriers (NVOs) in the United States and China.
“They can’t get enough truck drivers,” he said. “There are skeleton crews at the factories. Warehouses are closed.”
In past years, many workers in the coastal areas who went to their homes throughout China for the Lunar New Year factory shutdowns returned a few days late. This year, the situation is compounded by a hesitancy among workers to travel on crowded trains amid unceasing reports about the virus and its spread, Monroe said.
Carriers announce 82 blank sailings
Once merchandise begins rolling off the production lines, BCOs will face an unprecedented number of blank sailings from Asia to North America. In this week’s Sunday Spotlight, Alan Murphy, CEO of Sea-Intelligence Maritime Consulting, said carriers have announced 82 canceled sailings into March thus far.
“With increasing announcements in the past 24 hours of factories extending closure periods further, it seems likely that the number of blank sailings might also escalate in the coming week,” Murphy wrote.
Trans-Pacific services from Asia to the West Coast will be the hardest hit by the blankings. “There will be a staggering 62 blank sailings on the Asia-North America West Coast trade lane, 19 of which have been in relation to the coronavirus outbreak,” he said. Carriers have announced 20 blank sailings to the East Coast, 18 of which are due to the Lunar New Year factory shutdowns, and two to the virus, he said.
Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, estimated that containerized imports at US ports in January declined 3.8 percent from January 2019, and will fall 12.9 percent in February and 9.5 percent in March year over year. Global Port Tracker projected that year-over-year increases in imports will resume in April, but the first half of 2020 will still be down 0.4 percent from the first six months of 2019.
In attempting to deliver transportation solutions and work-arounds due to vessel delays, blank sailings, and port issues within Asia, Swire Shipping said in an advisory that 14-day quarantine periods for vessels that call China must be taken into consideration when projecting vessel arrivals in receiving countries. “These restrictions may lead to delays caused by changed rotations or longer transit times,” Swire said.
Logistics experts emphasized that conditions in China, the rest of Asia, and in the trans-Pacific shipping arena remain fluid, especially for any services touching China, so BCOs should maintain close contact with their transportation consultants for regular updates.
JOC correspondent Keith Wallis contributed to this report.