Supply chain implications for ocean shipping from COVID-19

It was reported as recently as early March that the impact of the Coronavirus on shipping was subsiding. But there has been and will continue to be substantial impact on the international supply chain. 

Informed and calculated preparation will be required by international trade participants, notwithstanding the reawakening of China’s manufacturing industry.

Recent reports from China indicate the fewest new COVID-19 cases since the crisis began. The World Health Organization (WHO) declared that the epicentre of the pandemic has now shifted to Europe. 

A lingering effect from the recent impact of COVID-19 on China’s industry and economy are “blank sailings” (or void sailings) where scheduled voyages have been cancelled or suspended, which will continue. This will cause further port disruptions in coming weeks as the deficit of empty containers available for US exports grows. 

In other words, significant numbers of suspended voyages have created a situation where containers that would normally have gone in to the US with loads, been unloaded and ready for exports from the US, have instead accumulated in Asia as they wait to be filled. 

The Journal of Commerce (JOC) recently reported that these shortages would intensify over the coming weeks. Members of the New York/New Jersey Foreign Freight Forwarders & Brokers Association confirmed with the JOC that a shortage did not currently exist in the Port of New York region.

In a statement to the JOC, Bob Connor, Executive Vice President – Global Transportation for Mallory Alexander, agreed and added: “From our perspective, at this time, the problem the JOC describes is for real, but for now is almost exclusively an LA/LB problem caused by their decision to reduce hours at terminals in anticipation of fewer vessel calls having low utilization factors associated with COVID-19. Bottom line: while there were fewer vessels caused by the voided sailings, production rebounded in China a little quicker than expected and vessels actually had decent container volumes.”

As COVID-19 spreads throughout the US and Europe, there will be disruptions to international ocean transport that will have significant and ongoing effects on the global international trade and supply chain.

For more information visit www.joc.com

25th March 2020