Editor's Note: We're updating this article frequently to ensure it reflects the latest news and developments around the impact of the coronavirus, now officially known as COVID-19.
We’ve received a number of inquiries about the impact of the coronavirus outbreak on international shipping. We want to help you navigate this tricky period, so we’re pulling together as many details as possible to help you figure out how your shipments may be affected. The main takeaway is that production, shipping, and fulfillment from China will be majorly affected due to strict anti-coronavirus measures being put in place.
However, neighboring Hong Kong remains functional, with the coronavirus only having a minor impact on courier services and warehousing. So, if you’re operating in the region and are looking for some stability in shipping and fulfillment during this tricky time, Hong Kong is still a good choice.
How Can Companies and Shippers Manage the Coronavirus Impact?
Global trade, with its heavy emphasis on Chinese manufacturing, has been rocked these past weeks by a reduced Chinese labor force and business closures caused by the coronavirus.
Coronavirus and shipping: here is what we know at the moment:
1. Reduced Air Freight Capacity but Soaring Rates
Most airlines, including American, United, British Airways, and Qantas - have suspended up to 90% of their passenger routes, operating only a barebones flight schedule globally. As a result, we've seen air freight capacity drop to its lowest in three years. And, now that Chinese manufacturing is starting up again and there's a growing demand for air freight, rates have spiked up to 27%.
To try and counter this and keep some kind of operations running, many airlines, including Virgin and Qatar, are using their passenger planes for cargo flights to up capacity.
Here are some of the airlines currently reducing or cutting services:
· American Airlines
· United Airlines
· British Airways
· Cathay Pacific
· Singapore Airlines
· Silk Air
· Malaysia Airlines
· Virgin Australia
2. Global Mail Slowdown
Flight suspensions due to the coronavirus have also taken a toll on global postal services. The U.S. Postal Services has informed its counterparts in other countries that it is "experiencing significant difficulties" in getting letters, parcels, and express mail items to various parts of the world due to foreign postal service suspensions or the unavailability of transport to these areas, and will therefore no longer accept mail destined for these countries. These include: Bolivia, Peru, India, South Africa, Argentina, Egypt, Morocco, Cuba, and Qatar.
Many national postal services have announced temporary route suspensions and expect delays on most other routes. In countries dealing with major pandemic outbreaks, including France, Italy, and Spain, the services are operating at far less than their normal capacity. They've also all suspended signature-on-delivery services.
Most national post services have announced mailing disruptions as a result of the coronavirus, including:
· United States Postal Service
· China Post
· Deutsche Post
· Singapore Post
· Swiss Post
· Post Danmark (Denmark)
· Georgian Post
· Hellenic Post (Greece)
· Posta Româna (Romania)
· Posta Serbia (Serbia)
· Correos (Spain)
Editor's note (June 8, 2020): the above has been updated to reflect the USPS's latest statements.
Related: Coronavirus: US Courier Operations
3. Reduced Courier Capacity
Many couriers have also been affected by the pandemic. UPS, FedEx, and DHL have all reported a number of route suspensions as a result of government restrictions - including in places like India - as well as delays on most routes. In addition, they've all suspended signature-on-delivery services. In addition, most couriers are now imposing temporary emergency surcharges to continue shipping during the pandemic.
For urgent deliveries, it’s best to use express shipping methods, as these have remained largely functional during the outbreak.
4. Ships in Quarantine
Unlike air freight, ocean freight is usually pretty independent of passenger traffic and accounts for the bulk of supply chain shipments. Meanwhile, the Yangtze remains an important internal waterway for China, running through Wuhan. With traffic being disrupted, the effect of coronavirus on shipping has been significant. It caused an unprecedented number of black sailings on ocean freight, and then a huge spike in air freight rates due to low belly capacity.
Most of the world’s goods are shipped by sea but the marine shipping industry is set to take a hit as demand drops and countries put stringent measures against the Coronavirus in place. Countries such as Singapore and Australia have refused to allow any ship that’s been at a Chinese port in the preceding two weeks into their ports, while other countries - like South Korea - have put stringent screening measures in place.
5. Factory Production in China
To combat the coronavirus, the Chinese government extended the Lunar New Year holiday to 9 February in Shanghai, Ningbo, Shenzhen, Xiamen, Fuzhou, and Qingdao. Factories are now reopening and production is ramping up quickly.
6. Hong Kong eFulfillment
Although factory production and inventory shipments out of China are expected to experience delays, if your goods are already at your partner warehouse in Hong Kong, you shouldn’t face any fulfillment delays. Hong Kong warehouses are open for business and have not changed their SLAs for processing orders.
7. US Customs
We have been informed that at this time, US Customs is not planning to hold air or ocean shipments from China due to the coronavirus. This applies to both courier and postal shipments. As such, if you already have shipments en route from China, you shouldn’t experience delays at US Customs. In addition, the Trump administration has announced a 90-day suspension of import tariffs to help local businesses get through the pandemic; the tariffs will need to be repaid at a yet-to-be-announced date.
Covid-19: Economic Impacts
We're now getting an unnerving glimpse of just how widespread the effect of the coronavirus pandemic will be on the world economy. Previously, we'd mentioned that events around the world had been canceled, including Hong Kong Art Basel and the city's Arts Festival - while others, such as the famous Hong Kong Rugby Sevens, are being postponed. Even Barcelona's Mobile World Congress, a leading mobile tech show, was called off after leading companies like Nokia, Vodafone and Ericcson pulled out; while the hotly anticipated Baselworld watch and jewelry show in Geneva was postponed to 2021.
In China, factories have now resumed production after shutting down for the Chinese New Year holidays towards the end of January. This caused major supply issues for companies around the world and experts predict this will continue to have a huge negative impact on the world economy. It also had significant implications for supply chains around the world as there was less capacity to move goods around the world, and air freight rates spiked.
Tourism is another industry that's taking a huge hit. Chinese visitors accounted for 150 million trips in 2019, and now that they're staying home, the world will feel it. Of course, that issue has now expanded to include the rest of the world. From Paris to Bangkok and New York to Singapore, hotel and airline bookings are down as travel has been all but suspended; attractions that were forced to close temporarily are now cautiously reopening but dealing with low visitor turnout; and restaurants and shops that would normally have been busy with tourists remain shut in accordance with government mandates, or at low capacity as locals shy away from socializing and respect social distancing rules.
Months after the pandemic first began, tourism has effectively been shut down. Some countries are now planning to cautiously reopen their borders this month, while others are in talks to create travel bubbles, or air bridges, between countries that have similar COVID-19 situations. But, with so many uncertainties about testing and quarantines, it remains to be seen whether people will actually be able to travel internationally this summer.
5 Shipping Management Tips to Use During the Coronavirus Pandemic
While you’ll be concerned with resolving pressing transportation and supply chain issues at this time, it’s important to remember to communicate early and often with anyone that may be affected by any issues you face. Here are a few tips for managing your shipping during this period:
- Be sure to notify clients in case of delays due to the outbreak, especially if you are waiting on production in China or using affected solutions like Seko.
- Communicate directly with your suppliers and warehouses to stay on top of any changes to the current situation - even if they’re not fully operational, most will have customer service teams to assist with your queries.
- Use express courier services if you want to avoid delays.
- Let your customers know if they may experience delays in receiving their orders, and provide accessible customer service so they feel they can keep track of what’s going on.
We will continue to monitor the situation and send updates as we learn more. In the meantime, you can still process shipments as normal on the Easyship platform.