The Coronavirus,now officially named COVID-19, is continuing to have impacts on global supply chains. The logistics industry is very labour driven with limited automation in warehousing. Due to the the travel restrictions in place, it is making it difficult for manufacturers to get employees back and bring production to pre Chinese new year levels. These travel restrictions are also effecting the trucks moving the goods and containers to port for export. Currently trucks are not permitted to cross from one province to another and cities are restricting which and when trucks can enter them. Complicating all of this is each city is creating its own set of rules to control entry and mange output. A truck operator may be able to collect goods from one city but unable to deliver them in another city. Ports such as Shanghai and Ningbo are particularly hard hit as the majority of shipments originate in a different province.
Several shipping lines have introduced additional blank sailings in the coming works. While shipping demand has dropped due to goods not getting to the ports, this will have the effect at the moment reducing capacity and keeping rates high. However if the COVID-19 gets worse and manufacturing continues to decline along with further movement restrictions within China then rates will begin to fall off. Currently the Dow Jones Transportation Average shows limited impact by the Coronavirus which means the markets are indicating that they feel the Coronavirus is under control and expect cases to begin to decline as the Authorities get control. However we at AJF are still very cautious about this and have first hand knowledge of the difficulties can shipments ready for export. It may be a few more weeks before the real effects of the manufacturing slowdown are fully felt.
We have been assisting some of our clients in sourcing new suppliers and manufactures from both Vietnam and India to help make their supply chains more resilient to the on going effects of the virus. Working with our agents in these countries we have found suppliers, arranged to inspect factories, ensure they comply with Western labour requirements and have the capacity to take on new clients. We have also arranged quality checks of the products to ensure they comply with the clients standards.