We continue to hear from agent partners in China and read about the rebound from coronavirus. While the news coming from China is positive as cargo begins to move again, the impact and ripple effect to the freight business are being felt in the United States.

First the good news. Over the weekend, the South China Morning Post reported top container ports are loosening the backlog of cargo on their docks as workers return. Coronavirus led to labor shortages in ports throughout China causing massive port congestion.

For perspective on container volume moving through ports in China here are some of the statistics the South China Morning post article shared:

• China processes around 30% of global cargo traffic per day, which was about 715,000 containers daily in 2019.
• The average wait time for container vessels at the third largest container port in Zhoushan, China spiked to more than 60 hours the second week of February.
  The city of Ningbo, which includes Zhoushan, has 24,000 registered container truck drivers. Just 800 were working as of Feb. 12. As of last Friday, 7,000 had returned to work.
• By Saturday, 13,235 twenty-foot-equivalent unit (TEU) containers cleared the port.
• As further evidence cargo is moving, Shanghai’s port of Yangshan, the biggest deep-water container port in China, cleared 59,800 TEUs last Thursday, exceeding the average daily volume in 2019 of 54,200 TEUs, the port said.

One of our partners in Shanghai reports a similar story. His email to us says the coronavirus disruption is under control, daily new recovery cases are over 20 times compared to new infection cases. Most manufacturers and transportation providers have resumed work. Official statistics released below show the back to work rates (as of the end of February):

• Zhejiang Province 99.8%
• Jiangsu Province 99%
• Shandong Province 98%
• Anhui Province 94.8%
• Guangdong Province >90%
• Shanghai 87.1%
• Tianjin 81.3%
• Fujian Province 89.3%

Steamship lines report a similar story. Our friends at Hamburg-Sud steamship line sent this notice:

In the Asia Pacific region, Hamburg Süd staff will return to the offices in Mainland China and Hong Kong as of this week. Preventative measures are in place and staff will be working in shifts between home and the office until March 16. Vessel and terminal operations in the Greater China Area continue to operate normally. Customs houses, ocean terminal depots and all off-dock depots remain open. Empty pick up and laden return services are operating normally.

Shipment booking requests by air and ocean are increasing rapidly. Air cargo space is deteriorating rapidly. Airfreight space is very tight and rates are increasing quickly, almost daily. Ocean rates remain stable as carriers slowly bring back services to full capacity.

The message is China is working overtime to get manufacturing and transportation services back to full capacity.

Effect in the United States

As containers start moving again at ports in China, major U.S. ports including LA/Long Beach are reporting the lowest container volumes since 2015. The port’s executive director Gene Seroka told Container News they’re estimating the port will be down between 20 to 25% in cargo volume in February. Here are other stats from the article:

• At the Port of Long Beach, the easing has hit volumes by a collective 12% for the first two months of 2020. The port normally processes $180 billion in trade. That 12% translates to $12 billion in lost trade.
• Traditionally at this time of year, the Port of Long Beach has around 16,000 trucks in and out of the port each day, that’s dropped to around 8,000 trucks.
• This container crunch is now leading to furloughs. Shippers Transport Express, (STE), a motor drayage company whose clients are international carriers that transport out of East Asia, recently sent a Worker Adjustment and Retraining Notification (WARN) for their employees out of the Ports of Los Angeles and Long Beach.

With cargo shipment times by ocean taking 30 days plus, the ripple effect will impact the United States, but it will take time as the situation to supply chains normalizes.