The spread of the coronavirus is impacting individuals and supply chains alike, with hundreds of new cases announced every day.
The biggest task facing the world right now is stopping the spread of the coronavirus.
COVID-19 caused quarantines and thus factory shutdowns in China at the start of 2020, leading to a reduction in exports. The drop in demand resulting from the factory slowdown in China will cost ocean shipping companies a combined $1.9 billion, according to the most recent estimate from Sea-Intelligence.
The Australian Government’s decision to impose a 14-day quarantine on vessels that leave mainland China after 1 February bound for Australian ports is causing scheduling issues for Australian shipments.
As an example, Maersk have changed their vessel routing to go via Sydney and Melbourne prior to docking in Brisbane to allow a 14 day quarantine from leaving Ningbo.
Within Australia, state borders are being shut. The Government statements have listed transport and logistics, or the commercial supply chain, as an essential service that is able to continue work despite state shutdowns, including continuing to work cross borders.
But even when the global public health crisis is under control and global supply chain disruptions caused by COVID-19 end, many large companies expect that businesses will not return to normal for between six to twelve months.
China’s supply chains are coming back online
With China ramping up their production again, we are starting to see ocean carriers putting an increased volume of ocean-freight capacity back into circulation. Ports are coming back online and normal operation is resuming. But while landside operations in China have resumed, international carriers and operations in other countries are being impacted.
The good news is that most global ports and shipping lines are operational and increasing capacity daily. However the situation is far from predictable and stable. Ocean rates are volatile with the spot market rates fluctuating weekly depending on shipping lines. Freight forwarders, BCO’s and shipping lines have called force majeure on most of their contracts and some vessels are omitting ports. Containers are still available for packing on the ground in China but other countries are seeing a shortage of availability with European countries seeming to be quite heavily impacted.
Due to the heavy restrictions on air travel at the moment we are seeing global airfreight capacity reducing rapidly. Approximately 50% of global air capacity is now grounded and airfreight rates have skyrocketed. As an example, airfreight rates out of China have increased 500% due to lack of commercial airlines operating. We are also seeing delays of up to 7 days getting freight out of mainland China. We expect this scenario to last for at least the next 30-60 days.
Supply Chain Optimism
While there is a lot of doom and gloom around, it is easy to overlook the positives that we are seeing at the moment. Firstly, freight is still moving. It is still arriving from overseas and moving through borders. Some businesses are flourishing through this time while working from home (an option Explorate has provided staff from day one) is becoming the new normal. Technology is playing a role in facilitating this “new normal” and allowing business, friendships and families to keep in contact even when physically isolated. Team Explorate is always open for a zoom or hangout online if you feel like you need a bit of face time during this period. As you can see our staff are always keeping our customers smiling with interesting backdrops during our face to face chats.