As the outbreak of COVID-19 continues to disrupt trade around the world, China claims some success in containment while other hot-spots emerge, particularly in Europe.
For those small businesses involved in import and/or export, we present this brief compilation of how international supply chains are coping with the COVID-19 virus problems.
Factories are reopening, but automakers and other industries aren’t expected to return to normal production until at least mid-April due to disruption to supplies of components. Reports are indicating up to 90% of factories have re-opened depending on the province, (excluding Hubei) with production continuing to ramp up at around 60-70% operating capacity, increasing towards normal working and production capacities. Hubei province began allowing factories and some other businesses to reopen Wednesday in a show of confidence that Beijing is gaining control over the disease that devastated its economy.
It is understood that there are reasonable stocks of export goods in storage that should be able to enter the supply chain immediately those places open back up. We expect the Chinese government will provide assistance to ensure a full return to economic stability is achieved as quickly as possible. This may include financial support / and promotion of internal markets.
As factories gradually ramp up production, container vessel load factors return to around 80-85%. Carriers like Maersk, COSCO, CMA, MSC, ONE are expecting the volume demand will pick up very soon in following weeks, especially from 2nd half March as volume of bookings lift quickly. Global supply chains are in urgent need of materials and products from China which is driving up the demand for airfreight. With passenger flights in/out of China largely suspended, approximately 85% of the belly capacity has left the market. Reduced flights capacity has led to congestion and a significant spike in airfreight rates to and from China.
The Italian Government regulation issued on Monday, 09 March 2020 to contain the coronavirus outbreak has extended limitations to social activities to the whole country. However, goods circulation is allowed across the entire country; therefore, there is no impact on import & export shipments handling at the moment. Pick-up and delivery services to/from Italy operate as usual. Although airlines have reviewed their operational schedules, with many flight cancellations impacting space availability, at the time of writing, Australia is not following the lead of the USA in prohibiting flights to and from Europe.
Airfreight – While international air cargo capacity is a challenge, domestic flights in South Korea are unaffected as of today.
Seafreight - At the moment, there are no void sailings or embargo announcements to/from South Korea from ocean cargo carriers. However, delays of 2-3 days are to be expected in/out of ports, container yards (CY), container freight stations (CFS). And, as we have reported in previous posts, reefer exports are expected to be limited due to insufficient plug availability in terminals.
We will continue to issue regular updates on the effects on international trade occurring as a result of COVID-19 as the situation unfolds. As licensed Customs Brokers and International Freight Forwarders, Colless Young offers you correct, professional advice on all your import and export shipping needs. We are based in Brisbane and handle cargo at all major ports and airports around Australia.