Freight and Shipping – Effects of Coronavirus

February 29, 2020 0Shipping Blogs

Importers and exporters get hit

For importers and exporters, there could be no worse of a time than an epidemic to hit their business and shores. The virus has had intangible effects on the global economy. Devasting effects that can be felt at every possible party in the shipping and supply chain

What’s Happening in China and the Shipping World?

That’s the relevant question most importers and exporters are asking. Even us as freight brokers / freight forwarders are querying the effects on the supply chain. The answers that are currently coming out of China is that majority of the cities are in local shutdown. Most of the manufacturing plants are still not operating due to government issuing strict controls and closures.

The Rush  

Can you imagine, the extensive amount of global orders mainland China receives. The high demand for their goods. With high demands coming up to Christmas it’s no wonder everybody is in a state of mad rush.

Carriers / Shipping lines / Freight agents / importers and exporters all swamped with madness as to try and get products / goods to their valued customers. With such a rush, we then run into Chinese New Year.

 Everything in China goes offline for 2 weeks. Creating back logs on the docks, overdue orders and workers that were in manufacturing returning to their hometown for a holiday.

Virus Hits

The Time the virus hit, it could not be a worst time within the supply chain with the high demand in cargo.  The government implemented controls and restrictions on workers returning to their jobs in order to contain the virus.

Manufacturing workers who had left to see their families could no longer return to work as the cities were now in total lock down. This had created a crisis for the manufacturing industry in China since they no longer had labor.

The Docks

On the docks of China. Things were to be said to be moving slowly. From a freight agent / freight forwarders perspective, when the controls of the government were implemented there was a lot of confusion and doubt as to whether a container would be able to be loaded onto a vessel.

Our team handled our client’s containers quite well.  Although there was no way of connecting to local parties and wharfs in China, we still had communication to our team members at home who use various chat methods.
This enabled on the ground direct information and coordination.  There were even blank sailings were vessels would avoid heading into a Chinese port, as no country would allow them to dock in without entering quarantine

Australian Quarantine

Australia on the east coast, ended up having a notice sent out to industry members in the maritime. The ministry declared that a 14-day quarantine delay on all vessels would be put in place. Any vessel that had a Chinese calling port would now need to wait outside Australian waters until they were quarantined. This resulted in cargo being delayed even further. With the numerous container ships not able to dock, soon this was abolished.  Australian Quarantine acted well versed ensuring the public did not be exposed including the workers on the port.

Shipping Tips for Importers and Exporters

So now we are reaching a point to say what will happen.  If you one of the many importers caught in the equation where you are awaiting your cargo to be manufactured. You understand the supply line for your stock has dropped. The product line has diminished, and you have overly eager customers waiting for you to re-sell those goods to them.

Within the industry there are estimations that it will be up until September 2020, for the supply chain to recover.  Currently the Chinese sea carriers are lowering their freight rates to encourage the many importers around the world to start ordering from them again.

The Effect

This will have a double effect. There will be an influx of orders coming in and then there will be that chaotic vessel surge, where the vessels that was once avoiding Chinese ports will start picking up. Till then there may be delays in getting the containers back in.

Not to mention already there is a port delay with the Chinese New Year and coronavirus.  These are things to consider when trying to order goods out of China

Key Concept that we can take away

The Key concept to take away from this is never put your eggs in one basket. Such an epidemic could not be seen. A strong importer would be utilizing manufacturing from other countries such as Vietnam and India.

There is quite a trend that some factories have moved to these destinations to help the production line to continue and meet the requirements of the consumers they sell to. If you had put your eggs in one basket, ordering from a couple of suppliers from China, it’s a good learning curve to now understand that spreading your portfolio of manufacturing can help in this crisis.

Take advantage

If you have setup and communicated with suppliers in various countries apart from China. Thus it could lead to an advantage over your bigger competitors. While they are still waiting for the Chinese to come online. The demand for the consumers will not wait. This would be a great time to get some orders processed from the other countries and import them. Even raising prices till the market settles can land you a bigger net in your pocket. A beneficial time to also add more clientele to your list. 

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TEL : 02 8384 6581
Email: info@freelanceshipping.com
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