for more Shipping and Freight forwarding news

 for more Shipping and Freight forwarding news

As we enter the second week of March the Coronavirus (a.k.a. COVID-19) & its outbreak continues to dominate news headlines globally.

There has been a significant human impact already, particularly in China and most recently in Italy, as the virus continues to move across borders with work ongoing on vaccines and control measures to try to slow its progress.

To date, COVID-19 has been confirmed in 110 countries with over 112,000 confirmed cases.

63,000 of those infected have recovered, but sadly there have been 3,880 confirmed deaths across the globe directly attributed to COVID-19.

As we look for perspective, it is worth comparing these numbers to the common flu. Although reports do vary, a joint study by the CDC & Global Health Partners back in 2017 estimated annual deaths from flu at between 291,000 & 646,000 (https://www.cdc.gov/media/releases/2017/p1213-flu-death-estimate.html).

So, whilst we must not underestimate COVID-19 it is good to maintain a sense of perspective.  Following today’s emergency Cobra meeting the advice from the government remains one of vigilance & common sense ahead of school closures and banning public events which would for sure lead to more fear and panic buying.

For supply chains – It has of course been a challenging time. The initial outbreak and subsequent containment measures in China coincided with Chinese New Year and meant the seasonal factory closures remained in place for pretty much the whole of February. This knock-on effect has been huge. If we consider Shanghai’s Yangshan Port alone handles in excess of 50,000 TEU daily when at full capacity, you can see the ramifications of the world’s leading manufacturing hub being brought to a virtual standstill.

However, following government checks, factories have been given the green light over the last 2-3 weeks to start production again with latest reports putting capacity back at between 60-80%.

There have still been challenges to face though, with a significant shortage of workers in other key parts of the supply chain, namely truck drivers, port operators and customs officials, so the pickup has been slow.

As a result of the drop-off in demand, carriers (both air & sea) have removed capacity with a reported loss of £2 billion for ocean carriers while IATA last week updated its forecast to a loss in excess of £63 billion for the Air Freight industry (see https://theloadstar.com/airlines-brace-for-multi-billion-dollar-losses-as-the-market-gets-really-screwed/).

With vessels out of rotation and equipment shortages now in full effect, there are further knock-on effects that must be overcome. Due to equipment shortages in the UK export prices have rocketed, more than 45% higher than the same period in 2019. Some carriers in the first week of March had even stopped taking bookings for the remainder of the month.

Please consider that equipment & space could be more difficult than usual to secure and the change in supply chain fundamentals is likely to lead to price increases in the short term as carriers try to mitigate substantial loses or face a dangerous prospect. This was partly highlighted last week by the collapse of Flybe. Of course this was not solely due to the virus, but for sure the additional pressures resulting from it were simply too much to bare.

The advice is to book early and to give as much notice as possible, we continue to monitor the situation closely as COVID-19 continues to affect different markets.

We have seen shortages recently in the Mediterranean due to reliance on the Far East for empty containers flows; we have also seen some UK businesses stop accepting direct driver-accompanied deliveries from Italy; most recently Saudi Arabia has suspended flights from several Middle East countries including Dubai. We are working closely with all parties to manage the situation and take a proactive approach to limit the impact felt to customer supply chains.

If you wish to discuss alternatives to traditional routes and look at sea/air, rail or road options please contact your local John Good Logistics office and we will do all we can to assist https://www.johngood.co.uk/contact/