What’s Happening With The Coronavirus?

The coronavirus is a major threat to the global supply chain. While its spread has been largely limited to areas of the AIPAC region and a few thousand cases outside of that region, it appears to be catching fire more quickly. The mass quarantines in Wuhan applied the metaphorical breaks to production and left the Shanghai Containerized Freight Index closed for more than three weeks. Substantial drops in ocean container rate indices occurred, losing up to $100 per $800 in the time frame. While this might not seem like an issue for surface freight, it alludes to a lowering of spot rate volatility. Meanwhile, Greg Knowler of JOC.com notes that the coronavirus has not yet led to a “rapid resumption of manufacturing almost 4 weeks after the Chinese new year, factories are struggling to restart production. An advisory from UK foreign affairs stated February 17 words that China continues to restrict the movement of people in response to the coronavirus outbreak.” As the restrictions continue and grow more common, especially in areas like the US that are trying to keep the virus from spreading at all costs, the risk to spot rate markets will increase. Restricted movements effectively open more capacity and lead to the bottom falling out from the spot rate market.

Potential Ways Coronavirus May Disrupt The Surface Freight Supply Chain

The impact of the coronavirus on surface freight in the US is not yet a primary concern, reports DAT. It’s relative containment overseas and strict containment in the US means that its disruption will be menial for the upcoming weeks. However, even that is a relative example. US supply chains depend on Chinese imports, and as the factories shudder in empty silence, technology products, auto parts, and medicines and medical equipment import levels will decline. Thus, volume in the US will drop. As the drops occur, more carriers will face the problems of too much available capacity. It’s the grand irony of 2020. There were years upon years of discussions of preventing the capacity crunch, and now, there is just too much capacity to make a difference.

Of course, additional disruption risks remain. Widespread contamination of freight or spread of the virus in people could lead to mass callouts among drivers, a flat-out refusal to accept mildly ill truckers at warehouse gates, and more. The potential for disruption is severe, and companies need an alternate way to ensure a disruption-free supply chain.

How to Lessen the Impact of the Coronavirus

Let’s be clear on one area of concern. There is not a way or step that individual shippers can take to 100% stop the coronavirus from spreading around the globe. It is a virus, and it’s up to health professionals and experts to stop it. Now, that does not mean shippers are left with empty shelves and angry customers. Instead, it just implies a need for more diversity in the supply chain. Shippers need to increase the number of working carrier relationships.

Shippers should take added steps to ensure carriers comply with all applicable health and government regulations. More visibility into truck location and ETA can also provide peace of mind to ensure shippers are not on the verge of interacting with truckers or others that were recently exposed to locations with a high volume of viral activity and potential effects of coronavirus on surface freight movements.

Compared to the flu, the coronavirus is more life-threatening when people fail to take basic precautions, such as hand-washing, not touching the face, and staying home when ill. With that in mind, shippers should take those basic steps and radically evolve their logistics management operations to secure more drivers, more carriers, more trade lanes, more stops (or vice versa), and more suppliers. In other words, it is time to scale the supply chain network upward to find more suppliers and available business-to-business service partners to avoid disruptions. Also, do not cut your shipping volume due to the coronavirus. Instead, ensure you can always find available capacity and routes by leveraging an advanced transportation management system (TMS).

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