Shippers fear growing supply chain disruptions due to Coronavirus

Travel restrictions for workers in China and supply chain disruptions there due to the coronavirus are raising fears among US importers and exporters that conditions in the trans-Pacific trades may worsen in the coming weeks. One shipper group is already urging container lines to extend so-called free time for container storage past Feb. 9. 

Meanwhile, the Coast Guard over the weekend announced strict reporting requirements for vessels arriving at US ports from China, although no vessel delays or other incidents have been reported thus far.

Supply chain disruptions, which will accelerate the drop in imports from China that occurs each year after factories in Asia close for the Lunar New Year, are already resulting in extended free time for container storage by some shipping lines. The Agriculture Transportation Coalition (AgTC) on Monday appealed to carriers to further extend free time for container storage and the return of empty containers given the extension of the Lunar New Year holiday.

Jon Monroe, a consultant to BCOs and non-vessel operating carriers (NVOs) who returned from China on Friday, said manufacturing by large industries such as automobiles, machinery, and pharmaceuticals in Wuhan and Hubei province could be disrupted into April if conditions worsen. 

“It’s not just the manufacturing there in Wuhan,” Monroe told JOC.com Monday, adding the  entire manufacturing and transportation supply chain in Hubei province will be affected.

Due to the extension of the Lunar New Year, Chinese citizens will be returning to work at least a week or two later than in previous years. Extending the holiday is meant to limit the interaction of individuals in work settings to lessen the spread of the virus, but it means that production at factories and shipping operations at the ports will be interrupted longer than usual.

Movement of raw materials and manufacturing inputs will also be delayed. Wuhan is a major hub for rail and barge traffic feeding Shanghai and other large ports in the region, and freight transport in the region could be impacted, Monroe noted.

AgTC, which represents agricultural and forest-product shippers, said most of the liner companies in the US trades have announced an extension of free time until Feb. 9 before demurrage and detention fees are charged for the storage of containers at marine terminals  and the return of empty equipment. 

“It would be immensely useful for members of the Agriculture Transportation Coalition if each of you, our ocean carrier partners, would announce that you will extend free time beyond Feb. 9,” Peter Friedmann, AgTC’s executive director, said in an open letter to the carriers.

Lunar New Year factory closures extended

The Chinese government last week extended the Lunar New Year holiday three days until Monday for most of China, and until Feb. 9 for the Wuhan-Shanghai corridor.

Chinese authorities on Monday reported 360 deaths and 17,300 cases of infection have taken place since the virus was recognized in December. By comparison, a total of 349 deaths resulted during the 2003 SARS virus over a nine-month period.

So far the only direct impact on liner operations from China has been a Coast Guard safety bulletin published over the weekend. The advisory stated vessels that have been to China, excluding Hong Kong and Macau, or embarked crewmembers from China within the last 14 days, without anyone being ill, will be allowed to enter the US and conduct normal operations, with restrictions.

“Crewmembers on these vessels will be required under (Coast Guard) Captain of the Port authority to remain aboard the vessel, except to conduct specific activities directly related to vessel cargo or provisioning operations,” the bulletin stated.

Also, vessels from China destined for a US port with any sick or deceased crewmembers, or crewmembers exhibiting symptoms consistent with the virus during the 15 days prior to arrival at a US port, must report the incidents to the US Centers for Disease Control for guidance and  instructions. The transit time for most vessels from the last port call in China to the West Coast is about 12 days, and at least two weeks or longer to the East Coast.   

The US Coast Guard did not respond to a request for comment on whether any virus-related incidents have been reported at US ports.

The Port of Los Angeles and the Northwest Seaport Alliance of Seattle and Tacoma said no vessels from China have been delayed in arriving at berth due to the virus. 

Ed DeNike, president of SSA Containers, said the SSA terminals in Seattle, Oakland, and Long Beach have not experienced any issues due to the virus. Employers, in consultation with the Pacific Maritime Association and the International Longshore and Warehouse Union, are making protective masks available to all workers who request them, DeNike said. 

Contact Bill Mongelluzzo at [email protected] and follow him on Twitter: @billmongelluzzo

Source: JOC.com