The news these days is full of reports on all kinds of things that can affect global shipping. If your products rely on international freight transportation, you may be wondering what’s next. First there were increased tariffs. Then there was fear of war with Iran. And now there’s coronavirus. You undoubtedly have questions. How will your business be affected with coronavirus and shipping?
Coronavirus and Shipping—and the Global Economy
According to the United Nations Conference on Trade Development, seven of the world’s 10 busiest container ports are located in China. And nearly 80% of world trading occurs via tankers and sea transportation.
While China is at the center of the coronavirus outbreak (now referred to as Covid-19), it’s not just one country that’s been affected. Due to China’s position in the economy—especially manufacturing—the entire global economy is feeling the brunt of the epidemic.
After all, clothing, cars, and electronics have long been shipped out of China. But that’s not all. As you consider the things you buy on a daily basis, much of it has traveled across an ocean to get to your door. And if you’re in the business of import/export, your supply most certainly has been affected by coronavirus and shipping.
American Shipper sums up the global impact of coronavirus and shipping: “Stock prices are collapsing, losses are piling up, and some segments are flirting with all-time lows. The outbreak has made an already weak shipping period exponentially worse.” And shipping analysts are saying this is as bad as it’s been in a decade.
No wonder so many companies are concerned.
The True Cost of the Crisis
The coronavirus has cost hundreds of millions of dollars in lost business. One report estimates the cost at $350 million weekly. Plus, boxes of goods have been removed from global trade networks in response to the outbreak. The Wall Street Journal reported earlier this month that at least 21 sailings between China and the Americas were cancelled, in addition to 10 cancellations across Eurasia. Those cancelled shipments mean that 350,000 containers are not reaching their destinations.
A Turnaround in the Market May Be Coming
According to the IHS Markit Materials Price Index (MPI), the tide may be turning, despite the bleak period the shipping industry has been experiencing. In the week of February 20, 2020, the MPI increased 1.1%. Seven of the MPI’s 10 subcomponents also reported increases. While it may sound like a small number, overall, this is great news. And the reason may be that the number of cases in China has been evening out.
The commodity markets, which have been hard hit by coronavirus and shipping issues, have also improved as manufacturing has been slowly resuming in China.
Analysts say that these trends may indicate that the worst is starting to pass and the economy will rebound, even if slowly.
Important Issues in Shipping
At Cyclone Shipping, we know how important it is to your business to get your items shipped on time and within budget. That’s why we stay ahead of the issues by following trends and keeping our finger on the pulse of what’s happening with coronavirus and shipping.
Some of the challenges we’re currently experiencing include:
- An equipment balance around the globe. With Chinese New Year followed by Covid-19, coronavirus and shipping have resulted in no equipment coming in. With our resources, we can anticipate an equipment shortage in a specific area; therefore, we don’t rely solely on using one carrier. Instead, we will book your cargo with multiple carriers. That way, should there be a shortage, we can have a backup in place immediately to put into motion and avoid shipping delays.
- Space crunches on existing sailings. No longer can we rely on weekly sailings due to blank and cancelled voyages.
- Massive backlog on future space availability. Due to the reduced number of sailings, many companies are booking ahead. At Cyclone Shipping, we are reserving space within two weeks and confirm booking in late April and early May.
- Delays on transhipments and extreme port congestions in the Far East. The port congestion is already creating delays at transhipment ports. We are carefully working around this by routing directly, minimizing transhipments, or routing through less congested overseas terminals.
Trust Cyclone Shipping for Your Global Shipping Needs
If you have concerns about a reduction in imports, no equipment available to export, an equipment imbalance, or delays and backlogs due to coronavirus and shipping, please contact us. We’re happy to discuss the alternatives we have in place to ensure your shipping needs are met.
