The arteries of the global container shipping industry are clogging up due to China’s fast-spreading coronavirus.  Approximately 80 percent of the world economy relies on international trade by way of ocean vessels, and China is home to seven of the world’s busiest seaports, according to the United Nations.  Nearby South Korea and Singapore each boast a major international hub, too. 

Leading shipping companies like Hapag-Lloyd, MSC Mediterranean Shipping, Maersk, and CMS CGM are now being forced to re-route cargoes away from Chinese ports for temporary docking at South Korea’s Busan hub nearby which is quickly reaching historic levels of container capacity.  Even when the coronavirus hysteria finally dies down, trade experts suspect that the rush to re-open the shipping lines will still create long-term chaos and congestion that may last for several months.

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Peter Sand, a chief analyst for an international shipping association called BIMCO, told CNN Business that the backlog of shipments of cargo containers will likely affect innumerable industries. A domino effect of short-term price increases due to limited product availability and increased consumer demand is likely to follow.

“A closure of the world’s manufacturing hub impacts container shipping at large, as it is a vital facilitator of the intra-Asian and global supply chains. This will affect many industries and limit demand for containerized goods transport,” Sand said to a CNN Business reporter.

Everything from automobiles to cell phones, farm machinery, and electronic vaping devices will probably begin experiencing extreme impacts next week, if they have not already.  In fact, carmaker Hyundai is already suspending production in its South Korea plants due to the disruption in the supply chain caused by the coronavirus.

While many seabound cargo ships are being turned away from Chinese ports and perhaps re-routed to other nations, a significant number find themselves stuck at port awaiting local dock workers to unload their precious cargo. Others find themselves adrift at sea, hoping for a quick lift of the entry ban by the Chinese government.

It’s not just seabound cargo.  Shipping by air and rail are also affected. 

Meanwhile, countries like Australia and Singapore are now closing their international ports, as well, which creates another problem known as “floating quarantine zones.”  In short, if an Australian cargo ship was enroute to China but was turned away due to the coronavirus outbreak, they are also not allowed to return home to Australia ports, leaving them in a short of international shipping limbo.

The shipment delays are also hitting the United States. On February 6, United Parcel Service (UPS) issued an official Service Alert stating the following.

“Temporary Service and Network Adjustment due to Coronavirus Outbreak in China. China’s General Office of the State Council has announced an extension of the Spring Festival Holiday and transport restrictions in an effort to minimize the spread of the novel coronavirus.  Accordingly, temporary adjustments to UPS’s regular delivery and network schedule will be put in place.”

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UPS further stated that shipments to and from the entire Asia Pacific region may be negatively affected, including Europe, Hong Kong, Taiwan, Japan, Korea, Singapore Malaysia, Vietnam, and Thailand.  A similarly worded warning of potential UPS delivery delays was issued for the Philippines on February 4.

Many major shipping companies are also stalling or halting shipments to the United States, Canada, and even Africa just in case the coronavirus outbreak spreads significantly to the western world. Even air cargo services have been severely disrupted.  Last Monday, the United Kingdom’s IAG Cargo – a subsidiary of British Airways, canceled all shipments in and out of China for at least the entire month of February.  The German logistics group DHL is also terminating airborne freight as well as cargo shipments by rail.

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(Image courtesy of CNN)