Coronavirus Update – February 2020

24 February 2020

Impact in Italy

Over the past few days there has been a significant increase in the number of confirmed Coronavirus cases in Italy, particularly in the Northern Provinces.

Italy has the highest number of cases outside of Asia with 152 cases confirmed and three people dead. Nearly all of Italy’s cases are clustered in the north, with 110 cases in Lombardy and the others in the regions of Veneto, Emilia-Romagnia and Piedmont.

The Italian government have imposed strict quarantine restrictions in two northern ‘hot spot’ regions close to Milan and Venice. Around 50,000 people will not be able to enter or leave several towns in Veneto and Lombardy for the next two weeks without special permission. In several provinces public events have been cancelled and transport, universities and schools have been suspended.

In terms of Supply Chain matters, we have not yet been made aware of any closures or restrictions in port operations, transport or other related activities. We are seeking updates from FJT Italy, and we will provide further updates as they become available.

12 February 2020

Delays in return to work schedules in China

The advice from the Chinese Government last week was that the general return to work date was 10 February, excluding the Hubei (Wuhan) Province which was to follow on 13 February, however this schedule is not being followed.

The information we are receiving from origins is that companies and regional areas are both applying their own schedules. Shipping lines and general industry contacts are now advising that the full return to work schedule for many cities may be extended to 17 February. Hubei Province is also targeting 17 February, although given the escalation of the impact of the virus this date is unlikely to be met.

Understandably both employers and employees are wary of returning to work, given the virus risk in open environments. Where possible corporations are utilising work from home arrangements where remote access is available. Whilst this may work for many office functions, this does not help facilitate the physical movement of cargo in or out of China.

Operations in key areas such as Shenzen and Ningbo remain closed at this point, with some key services such as schools to remain closed through to March. Shipping lines are working to develop alternative shipping methods via other Asian ports, however the scheduling of this is a formidable challenge, especially as other ports become increasingly reluctant to receive and handle China origin shipments.

We encourage each of our clients to maintain regular contact with their suppliers or customers to get the latest updates on the local situation in each region.

European sailing schedules heavily impacted

FJT is receiving updates from major shipping lines in the European trade that there will be blank sailing programs implemented through March and April that will impact into Asia and Oceania.

A blank sailing is where a vessel does not sail, despite being a scheduled service, and may refer to just one leg of a journey or the entire voyage and typically occur due to a lack of demand for the vessel. In this case there is no doubt that these blank sailings are a result of Chinese New Year holiday extensions and the impact on trade by the Coronavirus.

Major lines such as COSCO, OOCL and Hapag LLyod are releasing scheduling information for March and April and OOCL has advised FJT that they expect the loss of capacity to Australia to be approximately 80% during this period.

We strongly advise that all importers communicate with their suppliers to see if there are any opportunities to bring forward cargo availability dates to see if bookings on late February vessels can be made, although the current capacity is being taken up at a rapid rate.

As you can appreciate, this is a volatile situation and changes are occurring daily. Please contact your local FJT office to discuss options for your particular shipments.

7 February 2020

The supply chain ‘ripple effect’ of the Coronavirus is being felt around the globe. In terms of trade/supply chain impact, globally we are in uncharted waters. Currently there is information overload, from the mainstream media, as well as the from the general shipping/supply chain industry.

With acknowledgement to FJT Hong Kong & locally to our peak industry body FTA (Freight & Trade Alliance), we share the following update regarding the impact of the Coronavirus on supply chain operations:
  • China’s isolation amid the Coronavirus outbreak, a rare freeze-out for such a vital economic centre, has far reaching impacts around the world. Uncertainty over the virus has disrupted global trade and supply chains, depressed asset ­prices and forced multinational businesses to make hard decisions with limited information
  • Monday 10 February is the latest general target date for the finalisation of the extended Lunar New Year period and the resumption of general business activity in business and government departments. Currently the target date in the Hubei Province (Wuhan) is 13 February
  • Air cargo movements are greatly affected. Whilst emergency flights are still uplifting for passengers, air cargo is now a secondary consideration, dwindling towards a standstill. For example, Qantas have cancelled their direct services to/from China (Shanghai/Sydney & Beijing/Sydney) until 29 March
  • Handling of Chinese origin cargo at destination. The Department of Health have provided some additional fact sheets that may be of use especially when handling inbound cargoes:
  • China Free Trade Certificates of Origin: With the Chinese government departments closed, Certificates of Origin to facilitate duty free importation and clearance into Australia may not be readily available. Importers must pay normal rates of duty and claim a refund when Certificates of Origin can be obtained (there is a 12 month window post importation)
  • Vessel to be on the water for minimum 14 day period before being allowed to berth in Australia. Advice from Ports Australia is that in the scenario that the crew have been at sea for 14 days or more before arriving on our shores, then the Coronavirus is deemed to no longer be a threat. For example: If a vessel heads from mainland China to Sydney and the voyage takes 12 days, then the vessel will have to sit offshore for 2 days before a pilot will meet them. This has the potential to have a significant flow on effect in terms of overall sailing schedules and will have financial impacts on shipping companies that they will look to recover
  • Changes to shipping sailings and blank sailings (where there was a scheduled sailing that will now not go ahead at all). Shipping lines are in the process of adjusting their sailing schedules to/from China – not just to Australia, but worldwide. Vessel departure dates are sliding backwards, and now some scheduled sailings through February and into March are being cancelled. We expect this process to escalate. Already we are hearing from FJT Italy that blank sailings being implemented are going to affect European trade. Details of schedule adjustments are still works in progress
  • Cost recovery by affected parties – this is one of the big unknowns in terms of supply chain impact in these uncharted waters of the Coronavirus impact. Shipping Lines, airlines, ports, will all be assessing the financial impact of delays, reduced volumes, redirected routes etc. Supply chain costs are certainly expected to rise as a consequence of this situation. As an early example, Maersk Line, one of the biggest in the world, has announced some level of port congestion surcharges, given the volumes of cargo that are stuck in container terminals, hampering operations
The Coronavirus situation is a volatile, rapidly changing situation. We will continue to monitor and update as more information becomes available.
 

Please contact your local FJT Logistics office should you require further information.

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