The coronavirus epidemic has a significant impact on the transport industry. Chinese New Year holidays smoothly went into quarantine, and shipments from the Middle Kingdom stopped.
Even before the Chinese New Year, manufacturers tried to ship as many goods as possible, catch them on ships and railway trains at any rate. During the epidemic, Chinese agents tried to provide online work, but the situation was sluggish due to the closure of Chinese production.
Interruptions in factory operations in China caused by coronavirus disrupt the supply chain and make production impossible at industrial plants around the world. This, in turn, leads to a decrease in fuel production.
What will happen to the supply chain now? When will the situation begin to improve? What consequences are expected to happen with freight rates, railway tariffs?
Aviation – the most modern and most vulnerable.
$ 113 billion. Such “crazy” money risks losing due to COVID-19 world civil aviation. These estimates were published by the International Air Transport Association (IATA). At the same time, only about three weeks ago, the same organization estimated the potential losses of “just something” at $ 29 billion. This difference was explained by the fact that “the basis of previous assessments was the scenario according to which the influence of the coronavirus will be limited to markets associated with China.” Now the situation has changed – due to significant problems in many other countries. Which can reduce industry profits by 11% (positive scenario) or 19% (in the worst case).
This will lead not only to economic losses, but also to the bankruptcy of airlines that do not have a financial “pillow” in case of protracted force majeure. Much also depends on the flexibility of the companies themselves and their ability to adapt to new conditions. In particular, the ability to stimulate the growth of passenger traffic due to price discounts and other bonuses.
Shipping and port industry.
Back in January, due to quarantine and the resulting shortage of labor at enterprises and ports in China, a number of regular commercial flights from China to the United States and Europe were canceled. In general, cargo transshipment by sea slowed down around the world. Weather disasters were added: due to powerful storms, a number of departures had to be canceled, the delivery of some goods was delayed for tens of days. Damage experts estimate at $ 1.5 – $ 5.5 billion.
Currently, shipments from China are made, sea lines reduce freight to fill ships, rates compared to New Year’s are significantly different, but, according to experts, rates will return to the previous level by the end of March, as shipments continue. There is a tendency to change the direction of cargo flows. Part of the shipments will be transferred from the sea to the railway due to a more attractive transit time, since the shortage of products due to the interruption in supply will affect and will not go unnoticed.
Air shipments are partially suspended, and everything will depend on the policy – whether air traffic from China, Korea, Europe and other countries will be closed.
In the situation with coronavirus, the development of further events depends on political actions.
Of course, transportation will not stop – logistics is needed always and everywhere. But there will be a redistribution of flows, new routes, new suppliers, which can hardly be comparable in value to China. So we are waiting for higher prices for goods in general.
For many logistics companies, any crisis situation is an opportunity to show their experience, professionalism and competence in offering alternative routes.