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China Begins Recovery as Coronavirus Spreads

As coronavirus hotspots continue to appear around the world, the situation in China has finally begun to see improvement. The number of new infections is on the decline, with some cities reporting more than 10 days without a new case. The number of cured patients currently exceeds the number of deaths. More and more factories and truckers are returning to work, and although output volume has not returned to full capacity, ocean carriers are seeing an increase in freight bookings out of China for the coming weeks. Airfreight volumes are steadily increasing as well. Unfortunately, recovery has only just begun.

It is estimated that less than 50% of trucking staff has returned to work. In some parts of the country, that number is as low as 10-20%. This has led road carriers to enact new policies restricting the jobs they will accept. Cancellation policies have become stricter, and many carriers are refusing less-than-truckload (LTL) bookings. These strangled last/first-mile operations persist as the major barrier to freight movement. Containers are piling up in Chinese ports with the shortage of available road transport, leading to equipment scarcity in many areas, especially of 40-ft containers.

As a result, the industry has begun adapting to alternate transport modes and routings. The Shanghai International Port Group, for example, has launched barge services to shuttle cargo to and from surrounding feeder ports, mitigating the bottleneck of freight at Shanghai. Rail volumes have increased as a way to bypass road restrictions; one carrier is promoting a China-Europe rail service as a way to avoid seaports entirely. Some airlines have begun using passenger aircraft for cargo only to provide capacity relief.

The situation in Japan and South Korea is beginning to deteriorate in ways mirroring China’s outbreak and response. Newly infected cases continue to rise in both countries. If the virus cannot be controlled, carriers may begin to cancel the number of vessels to call Busan port, a major loading and transshipping port for South Korea. Delta Airlines has suspended its service between Minneapolis/St. Paul and Incheon, and reduced the service between Incheon and Atlanta, Detroit, and Seattle through April 30th. Shippers are advised to provide as much information as possible about upcoming shipments to reduce potential delays to their supply chains.

We will continue to monitor the situation and update our customers accordingly. Please contact your OTS Sales representative with any questions.