Coronavirus Impact on Global Shipping

Written by Knichel Logistics | February, 20, 2020

You’re likely well aware of the issues impacting global shipping in and out of China due to the Coronavirus outbreak. As of the end of last week, manufacturing within China still remains primarily shuttered. This has forced mass cancellations of sailings by ocean carriers. Thus far, a total of 21 sailings are now being blanked due to the Coronavirus on the Transpacific, on top of 61 sailings already blanked due to Chinese New Year. This brings the total number of blank sailings to 82 as of the end of last week. Due to the fact that imports are brought into the United States in small box containers, the impact will most widely be felt by those who utilize small boxes. With fewer coming into the country, there will be fewer available for domestic use.

Wanting to stay on top of potential capacity issues, we reached out to some of our small box domestic providers to see how they will be impacted by this on the US domestic side. They’re all in agreement that there will be some impact. Below are samples of some of the responses we received. Keep in mind that this is just a sampling of providers and not a conclusive list:

The huge reduction in equipment being loaded onto sea faring vessels and the lack of calls to Chinese ports due to the Coronavirus is causing the inland equipment stores in North America to dwindle. Forecasts are scheduling this equipment to remain in a deficit in all inland locations until mid to late March. At that time, we are hoping to see equipment return to its previous levels.
We likely have not seen the full impact yet due to the transit time on the water and the residual tightening from typical Chinese New Year import reductions. However, the boxes that would typically rush into the United States are not on their way and we expect things to be bottlenecked at least until halfway through 2020. At this time, the Chicago and Dallas areas are still looking good as far as equipment goes, but Memphis is quite bad.
Mitigating efforts are being made to minimize the effects of the impact on global container equipment flows. It is still too early to make specific predictions; however, we will likely see ripple effects into some inland locations in North America affecting container availability. There may be a period of equipment shortages in the following critical locations, despite our best efforts to prevent disruptions in equipment availability: Atlanta, Chicago, Cleveland, Columbus, Detroit, Fort Worth, Kansas City, Louisville, Memphis, Nashville and Toronto. Where there are alternative solutions, we will advise you accordingly.

In summary, our providers all seem to agree that the impact will be felt well into the first half of this year. Although deficits in equipment are concentrated by provider in specific inland locations currently, these could be more widespread in the future. Extended void sailing programs on long haul services from China are slated to continue until mid-March, therefore the full impact of the Chinese coronavirus outbreak on container volumes will not be fully measurable until ports announce their throughput numbers for the first quarter. As a final note on this situation, please be advised that we will work with you to find alternative options if you are a shipper who utilizes small box equipment until capacity returns to normal.

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