As March 2020 takes off, global awareness of the COVID-19
virus continues. The virus has shut down China and claimed victims in
countries around the world, spreading uneasiness while wreaking havoc
in financial markets.
On the west coast of the United States, the slowdown in ships
arriving from Asia is in marked contrast to the standard post-Lunar New
Year, when the goods usually pour into the U.S. and backhaul in large
movements to Asia.
Now marks an uncharacteristically slow time with diminished
business travel and cancelled industry events, and workshops in logistics
giving way to company advisories.
Logistics and air cargo is focused primarily on figuring ways
to transport indispensable products like pharma and other essentials,
while elsewhere consignments—specifically for ships that import
finished goods—are still stuck, having trouble even loading 10 percent
capacity in ghost town Chinese ports where movement has ceased.
The logistics chain is frozen, feeling the rippling effect
of what has been described as a Chinese economy that the virus “has
California ports are slow walking the passing days with little
to no volumes handled.
There are reports of surface ships departing Shanghai with
less than 25 percent load factors with their normal consignments of cargo
containers sitting empty in factories spread out over China.
Even when containers are loaded at manufacturers, they cannot
get to port as workers and truckers struggle to get back to work.
It is apparent that even when the production spigot turns
back on it will take weeks for shipping and logistics to return to normal.
By The Numbers
World ACD Friday said that January chargeable weight came
in at -5.8% year-over-year (YoY); -9.7% month-over-month (MoM).
-9% YoY, Special cargo 0.5% YoY.
Direct Ton Kilometers
Yield stood at
USD 1.74 (-5.6% YoY, -3.5% MoM). The yield in EUR stood at 1.56.
Cargo load factor dropped by 1.9 percentage-points YoY, and by 4.3 MoM.
Other Vulnerable Goods increased by +4.6% YoY, whilst Pharma & Temperature
Controlled Goods rose by +6.5% YoY. In perishables, meat did best (+6.7%
YoY), followed by Flowers (+2.2%), but all other categories declined (-2.7%).
Red Flag From World
On Friday February
28 ACD said that it thinks that the first quarter of 2020 (and quite possibly
the months beyond) will turn out to be an extraordinary period for the
world and for world trade, and thus for air cargo.
leaves traces in almost all aspects of life, not just in China but increasingly
elsewhere as well.
chains have been disrupted around the world, to varying degrees, marking
how much we have come to rely on Chinese production.
figures on how individual markets around the world will be affected, will
hopefully be out by mid-March when detailed February data on air cargo
volumes and yields will have been reported,” World ACD added.
at about the same time World ACD released these figures, in Amsterdam,
KLM was announcing major cut backs from top to bottom as the struggling
airline copes with a precipitous tumble in its global business.
As February came
to an unfamiliar halt moving into leap year, the World ACD figures; the
KLM news; and even the weather on Friday in Amsterdam, where a harsh rain
storm descended on that beautiful city, was like something out of a gothic
IMFAlways Looking Up
as the U.S. stock market wild ride continues, IMF Managing Director Kristalina
Georgieva said that it is reviewing its projections for 2020 growth in
China, while looking at the impact of the epidemic on the global economy.
In January, IMF said global growth is
projected to rise from an estimated 2.9% in 2019 to 3.3% in 2020 and 3.4%
“We are still hoping that the
impact will be a V shaped curve with a sharp decline in China and sharp
rebound after the containment of the virus,” Ms. Georgieva said.
“But we are not excluding that
it might turn to be a different scenario like a U curve where the impact
is somewhat longer.”
IATA Asia Airlines Heavy Hit
Last week IATA reset projections for 2020 airline business,
from a previous prediction of 4.1% to a contraction of 0.6%, the first
reversal in the fortunes of the airlines since 2009, a time in which declines
were driven by the financial collapse of Wall Street in 2008.
IATA predicted that in addition to suspensions and reduction
in services, COVID-19 is projected to result in a USD$27.8 billion revenue
loss for Asia-Pacific carriers in 2020. The majority of that would be
carried by airlines registered in China, with USD$12.8 billion lost in
that domestic market alone.