Our team had a call with a partner agent based in Shanghai, China this week. He gave great insight into the impact of the coronavirus on the shipping industry and the subsequent recovery.
Here’s a summary of the conversation.
- The epicenter of the virus is in Wuhan/Hebei Province, which was compared to the economics in Ohio – heavy automotive.
- Our partner said that Shanghai, Dalian, Xiamen and Qingdao are all open for business and that there are no government regulations on opening or going to work. Hong Kong has had no restrictions. Yantian/Shenzhen are still limited with teams only working from home.
- Ningbo and Tianjin/Beijing are still closed by the government; no one is going to work until earliest next week (Feb. 24). The situation in Ningbo currently is pretty rough with offices closed and teams working from home.
- Travel in China is restricted. The government regulation states if a person crosses from one province into another they must be quarantined for 14 days. This regulation is having major effects on trucking and transportation.
- This regulation also is impacting people returning to work. Our partner reminded us the virus and its impact began at the Chinese New Year. If people traveled for the holiday and returned home, they are quarantined. As weeks pass, more people should be cleared as healthy and be able to return to work as the 14 days of quarantine pass.
- Right now, there are no “fresh” bookings. Our partner company is down this week to less than 10% ocean export bookings.
- Ports are open in the cities noted above where people can go back to work. Ports are slightly congested because of the cargo that arrived and cannot be moved inland due to the provincial travel regulations. Steamship and port operators will be working to relieve port congestion as people return to work and travel regulations begin to lift. Quite a bit of congestion is caused by reefers, which have perishable items in them and can’t be moved. (Click here for an article on perishables.)
- Expect blank sailings and other creative methods for steamship lines to find ways around the lack of business leaving China currently. Due to congestion there are imports but no exports.
- March is expected to be good for importers. The lines will be competing for the limited amount of exports that leave the country, which could help rates. However, April could be a different story as China and its workers move back to full production. Our partner’s prediction is the situation will begin to normalize in April.