Global shipping hit by the coronavirus
Friday 14 Feb 2020
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, according to the United Nations Conference on Trade and Development. Nearby Singapore and South Korea each have a mega port too.
"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," said Peter Sand, chief shipping analyst at BIMCO, an international shipping association. "This will affect many industries and limit demand for containerized goods transport," Sand told CNN Business.
Disruption to the industry could reverberate far beyond China as the country seeks to contain the coronavirus outbreak by keeping factories shut and workers at home. Already, carmaker 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, the company said in a statement.
The shutdowns mean that some ships can't get into Chinese ports, as the loading and discharging of goods slows, said Guy Platten, secretary general of the International Chamber of Shipping, a trade body. Others are stuck in dock, waiting for workers to return to ports so that construction and repairs can be completed, Platten added.
Still more vessels are idling in "floating quarantined zones," as countries such as Australia and Singapore refuse to allow ships that have called at Chinese ports to enter their own until the crew has been declared virus-free, added Sand. Platten said he knew of at least one crew that is running low on food because their ship has been idled for so long.
Giant shipping companies such as Maersk, MSC Mediterranean Shipping, Hapag-Lloyd and CMA-CGM have said that they have reduced the number of vessels on routes connecting China and Hong Kong with India, Canada, the United States and West Africa. The shipowners say that moves to idle Chinese factories beyond the end of the Lunar New Year has curtailed demand for vessels and forced them to adjust their capacity during what is already a low season for shipping because of the Chinese holiday.
Logistics company Freightos warned clients to expect delays in getting goods out of China, and consider shifting some shipments from sea to air or even sourcing goods from other countries where possible. The backlog of shipments that typically follows the Lunar New Year will be made worse by the current situation, pushing ocean freight rates up and exacerbating delays, Freightos said.
Copyright 2004-2020 © Innovatek Ltd. All rights reserved.