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A roundup of the latest news on COVID-19 and its impact on the world’s supply chains and transportation networks.

Hardly a day goes by that some new piece of information or fact comes out about the novel coronavirus outbreak (COVID-19). The virus continues to emerge in new settings and countries, with more than 79,000 cases now reported worldwide, with the majority of infections and deaths occurring in China, MarketWatch reports.

Here at Odyssey, we continue to monitor the situation in China closely and are in daily contact with our partners for updates. Currently, the majority of factories are at 50% capacity with optimistic projections of returning to full capacity by mid-March. Even once all factories are in full production, we expect continued impacts on equipment, trucking, capacity, port space, and infrastructure.

On the Water

According to CNN, shipping companies that carry goods from China to the rest of the world are reducing the number of ocean vessels, as measures to stop the spread of the coronavirus crimp demand for their services and threaten to disrupt global supply chains.

The LoadStar says that the total number of port calls to Shanghai and Yangshang fell 17% in week seven of 2020 (compared with the same time last year). And as of the end of last week, 21 transpacific sailings had been cancelled, which came on top of the 66 cancellations during the Lunar New Year and represents 199,000 TEUs of reduced capacity.

About 80% of world goods trade by volume is carried by sea and China is home to seven of the world’s 10 busiest container ports. Automaker Hyundai has suspended production at its plants in South Korea because of a disruption to the supply of parts caused by the coronavirus outbreak in China, CNN reports.

“A closure of the world’s manufacturing hub impacts container shipping at large, as it is a vital facilitator of the intra-Asian and global supply chains,” BIMCO’s Peter Sand told CNN. “This will affect many industries and limit demand for containerized goods transport.”

Unusual Circumstances

Related issues impacting the supply chain right now include floating quarantines (where ships either aren’t allowed to dock or are stuck at docks); Covid-19’s lengthy 14-day quarantine period; and the fact that carriers are reducing the number of vessels on routes connecting China and Hong Kong with India, Canada, the United States, and West Africa, CNN reports.

Those reductions could impact the financial position of the world’s ocean carriers. Maersk, for example, has already warned that efforts to contain the virus are weighing on China’s exports and imports. The company has dropped more than 50 sailings from China ports since late-January.

“A.P. Moeller-Maersk A/S is facing a weak year as the coronavirus outbreak takes a toll on shipping volumes and freight rates,” the Wall Street Journal states, “after broader market conditions sent the Danish shipping giant to an unexpected fourth-quarter loss.”

Kinks in the Supply Chain

With fears of contagion keeping Chinese workers home, production is getting pinched, the Wall Street Journal reports. In the U.S., General Motors Co. unions have warned that a lack of China-made parts could slow assembly lines at sport-utility vehicle plants in Michigan and Texas, for example, while one jeans manufacturer in the southeastern Bangladeshi city of Chittagong has been unable to fulfill an order for 100,000 women’s jeans because it can’t get the fabric it needs from China.

“A month after the epidemic forced factories into limbo past their usual Lunar New Year break—a handful are reopening—officials and economists are warning that an extended Chinese shutdown could cripple global manufacturing,” the Wall Street Journal states, “and cost the world up to $1 trillion in lost output.”

With China accounting for nearly one-third of the growth in the world’s gross domestic product (GDP) (up from around 3% in 2000), few companies are escaping at least some of the impact of the coronavirus outbreak. “Apple Inc. said it won’t meet revenue projections for the first quarter as the epidemic shuts its China plants,” the publication reports. “In Europe, container-ship operators are preparing profit warnings as dozens of trips out of China are canceled.”

Keeping Watch Over the Issue

Over the next few weeks, all shippers should expect that congestion will likely take double the time of the actual closures to clear out. We encourage everyone to plan carefully for the potential for more blank sailings and shifting rotations as vessels calling on China will have a 14-day quarantine period. This could extend transit times and result in unpredictable arrivals at receiving countries.

Here at Odyssey, we’ve seen some indications that—with the continued reduction of import cargo impacting transportation service providers—there may be some delays in schedules and providers may have trouble maintaining their regular transit times. We will continue to monitor the impacts and provide you with updates as they are available.

Review our previous article regarding the Coronavirus here