Effects of Corona Virus on Logistics

The Chinese New Year is one of the slowest times of the year in the logistics industry, so the arrival of the novel coronavirus has emerged at the worst possible time. An estimation of over 400 million people travel to reach their destination at this time of year, the fear of virus transmission has accelerated at a terrifying rate.

The short term effect on shipping will vary; manufactory delays included. Typically factories take three weeks off for Chinese New Year, but we are already seeing an extension of this put in place due to coronavirus with many factories opening back up at the end of February.

Increased blank sailings will create another short term effect on the logistics industry with many steamship lines already announcing several blank sailings due to the Chinese new year, with this predicted to further increase the situation will result in minimal service openings.

Slower port operations will also play a part in this global catastrophe. As vessels slow down to surpass the incubation period. If the situation gets worse, port operations will be interrupted as ports will need to execute additional safety measures. If the situation gets any more drastic, there is risk of ports going into complete quarantine which would result in a stop in port operations entirely.

Long term effects of coronavirus will also impact the freight industry. Predictions of lower contract rates, will have a massive impact on the contract season and prolonged closures of factories will result in a low demand of good, causing a weak market rate.

Steamship lines are already struggling to ware the cost of the IMO 2020 regulation, so a forecast of drop in container volumes will create an even bigger negative impact. Without full space being utilised, operating costs will grow high and higher.

In the long term, businesses varying from consumer goods, raw materials, and manufacturing goods will feel effects of the novel coronavirus for months to come. Wuhan is a river port at the Yangtze River, commodities that cannot be transferred by truck and use the river as a mean of logistics, eg. iron ore, coal, large pieces of equipment, steel products, and home goods will feel the impact from the current situation.

For more information please contact the team on sales@stockwells.com.au or 1300 786 468

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