The Coronavirus (2019-nCoV) outbreak in China and the associated extension of the lunar new year holiday is likely to create a significant backlog in Supply Chain services in China.
Airlines have been rapidly reducing flights into and out of the country, with further void sailings anticipated on containerised ocean freight services if factory closures are extended.
Today’s figures put the confirmed cases of in excess of 20,000 with over 400 having sadly lost their lives.
With reports suggesting new cases growing daily by as much as 2,000 the situation appears no closer to control, China declaring a national emergency with the WHO warning the virus is likely to become a pandemic.
In terms of supply chains the effects are likely to be far reaching and the full scale will become apparent over time, but to give some context Wuhan, where the virus started, is the capital of Hubei Province and a key component for central China’s transport & logistics.
With a population of over 5 million people, the city remains on lock down.
Wuhan is a huge manufacturing area, particularly for the automotive sector, with large volumes of containers moving via the Yangtze River with an estimated 1.5+ million TEU moving annually, the vast majority via Shanghai.
There are also key rail connections running through Wuhan that connect Beijing in the north with Guangzhou in the south.
Factories in surrounding areas are currently due to resume work on the 10th Feb, this includes workers in Shanghai, but there are fears this date could change.
Also we must take into account the huge numbers of workers from Shanghai that will have returned home to Wuhan for Chinese New Year (CNY) and will now be unable to return to work, meaning there will be a shortage of workers in key sectors.
These include: truck drivers, port operators, customs officials as well as factory workers; all of which impact the throughput massively in China’s biggest container port.
We often see workers slow to return to work following CNY resulting in factories taking time to get back up to full production, an effect we would expect to see magnified in light of the current crisis and the associated fears around travel.
Shipping lines are already looking to increase the blank sailing program to try and mitigate overcapacity due to the resultant drop in demand and we see airlines cancelling flights in and out of China, all of which will impact supply chains.
First and foremost our thoughts are with those effected by the virus, but we are also working closely with our local offices to manage existing shipments and to monitor develops closely.
If you wish to discuss further, please contact your local Account Manager or office and for any urgent shipments you have particular concerns over please let us know and we can look to find alternative routes.
Lloyds Loading List – Coronavirus threatens freight demand slump and supply chain chaos
The Loadstar – Shippers brace for delays as Coronovirus keeps China’s factories closed