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 shipments. 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 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.
Here is what we know at the moment:
Reduced Air Freight
A number of airlines - including American, United, British Airways, and Qantas - have suspended all service to and from mainland China. Others, such as Cathay Pacific, are reducing flights to Mainland China by up to 50% through March. We expect that there will be further reductions and suspensions of scheduled flights as the coronavirus continues to run its course, and that the supply contraction will cause unpredictable rates, reduced air freight capacity, and create delays. That alone will likely push up air freight prices.
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 China, Hong Kong, and Macau due to a lack of flights to these areas. As a result, the USPS will no longer accept transit mail to these regions. In addition, China Post is disinfecting, offices, postal counters, and vehicles, to ensure safe delivery and to protect staff. China is also using "non-face-to-face methods" to deliver any mail it's still processing, which includes temporary storage at the postal outlet, availability for collection from the outlet, or delivery to a smart parcel locker.
Editor's note (February 14, 2020): the above has been updated to reflect a statement made by USPS that only transit mail will be affected and not letters and parcels posted in the United States.
Reduced Courier Capacity
Dropoff and delivery services for Hong Kong Post, Seko, DPD and wnDirect postal services were suspended until February 3. In addition, couriers have issues partial or full lockdowns in 13 Chinese cities, causing significant delays in inbound and outbound deliveries. However, postal services are slowly being resumed and mail delivery should return to a large extent over the next few weeks. For urgent deliveries, it’s best to use express shipping methods, as these have remained largely functional during the outbreak. Again, the impact can mostly be seen in mainland China, while Hong Kong has only seen minor effects.
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, Yangtze remains an important internal waterway for China, running through Wuhan. With traffic being disrupted, the effect can be significant, but it is still to soon to tell.
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.
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. Although work is set to resume on 10 February, many businesses have directed their employees to work from home. In addition, many factories will remain closed for the time being. As a result, factory production and business will be severely affected.
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.
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.
Economic Impacts Begin to Show
Just a few weeks in, the impact of the coronavirus on the world economy is already beginning to show. Already, events around the world are being cancelled - including Hong Kong Art Basel and the city's Arts Festival - while others, such as the famous Hong Kong Rugby Sevens, are being postponed. It's not just happening in Asia, either. Barcelona's Mobile World Congress, a leading mobile tech show, has also just been called off after leading companies like Nokia, Vodafone and Ericcson pulled out.
In China, factories have yet to resume production after shutting down for the Chinese New Year holidays towards the end of January, causing supply issues for companies around the world and what experts predict will have a huge negative impact on the world economy.
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. From Paris to Bangkok and New York to Singapore, hotel and airline bookings are down (Hilton just announced it's temporarily shutting down half of its Chinese hotels, while most airlines have now suspended all routes to China); attractions are being forced to close temporarily because of low visitor turnout; and restaurants and shops that would normally have been busy with tourists remain empty as even locals shy away from socializing.
Shipping Management Tips
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.
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