Looming coronavirus impact has local T&L on edge


Hope that lifting China’s anti-Covid-19 clamp will ease turmoil in supply chains globally

Looming coronavirus impact has local T&L on edge
Disruption in China is about to be felt locally

 

Global concerns about the disruption coronavirus Covid-19 may have on global supply chains are being highlighted nationally as Chinese container and airfreight volumes plummet.

The Western Roads Federation (WRF) reports one major operator observing, "it’s like the China container trade has fallen off a cliff in the last week and it will hit WA badly within three weeks".

These impacts are expected to hit multiple sectors of the WA economy both import and export.

"Fresh produce exporters from WA are also expected to feel serious impacts with reports of a shortage of refrigerated containers," WRF says.

"A shortage that may continue for some considerable period even when shipping returns to normal.

"The timing is also bad, as many WA businesses stock up to get through Chinese New Year but with the expectation of planned resupply.

"Even when Chinese factories begin to produce, there could be a 2- to 3-month lag in the supply chain. Many manufacturing companies, wholesalers and retailers will feel the impact as will the mining, resources and agricultural sectors expecting parts or equipment."

"WRF [is] forecasting a severe impact on transport industry jobs and as we ‘drive the WA economy’ it is fully expected that our WA business customers may also shed jobs.

The group has written to premier Mark McGowan, commending him on his early leadership in addressing mining, tourism and education sector concerns.

But given the impacts forecast on the broader economy, it now requests that McGowan convene a round table of industry leaders urgently to identify the scope of the risk and what action can be taken to mitigate them.

The warning backs up concern expressed two weeks ago.


Read what was exercising WRF minds over coronavirus early in the month, here


National organisation Freight & Trade Alliance (FTA) sees the situation as fluid and likely to change as early as next Monday, with Chinese cities and provinces are due to allow a return to work, after the Chinese government ordered an extension of the Lunar New Year holiday aimed at containing the virus’ spread.

"We are aware of forwarders really feeling the pinch withy such a heavy reliance on Chinese trade," FTA director Paul Zalai tells ATN.

"The immediate response by many is to reduce casual employees hours and to ask the full time and part time employees whether they would be willing to volunteer to take leave to alleviate the pressure. 

"This cannot be sustained indefinitely without a heavy toll on the sector and downstream impacts on the rest of commerce.

"We are now hearing that major retailers are re-examining business models and will look for longer term solutions to spread their risk sourcing from suppliers from a wider spread of origins.

FTA reports the situations and restrictions there are uneven across Chinese regions, however, international freight firms this week point to export port congestion in the country."

In an update on Asia-Pacific sea logistics, Kuehne + Nagel (K+N) says the ports of Shanghai and Tianjin are experiencing congestion.

Loading and discharging operations are also expected to slow down due to lack of stevedores.

"The rapid mass cancellation of additional sailings from China is likely to cause capacity shortage to backhaul shippers in the next 3-6 weeks depending on geography.

"The sharp reduction in effective capacity available to shippers will cause freight rates to leap on both headhaul and backhaul as exporters face space shortages.

"Due to the extended Lunar New Year holidays, yard density has reached critical levels.

"Consequently, this has resulted in severe congestion and an ongoing shortage of reefer plugs at the terminals of main ports such as Shanghai, Tianjin and Ningbo."

Chinese trucking "remains deeply challenged", international operator Agility reports.

"A shortage of drivers and road restrictions continue to impact domestic trucking, including pre- and on-carriage significantly," Agility reports.

"There is an estimated 60-70% shortage of drivers due to travel and quarantine restrictions.

"Domestic trucking is further complicated by provincial highway closures and significant waiting time at toll gateways due to increased health and permit checks."

However, other reports point to container shipping lines moving to normalise some operations and mop up backlogs.

FTA notes that the disruption is likely to affect other supply chains and trade that Australia relies on.

"Due in the main to the volume of traffic, importers and shipping lines in the China / Europe and China / USA trade lanes are being hit much harder.

"As reported on [shipping publication] The Loadstar website there are some reports of a vessel with capability for 23,000 teu and sailing with only 2000 teu on board," it observes.

"Clearly these levels of freight are unsustainable and will no doubt have an impact on decisions re further blank sailings and therefore impact on supply chains."

 

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