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Coronavirus is Impacting the Trucking Industry

02.27.2020 | By Chris Pickett | 5 min. read

The stock market plummeted on Monday afternoon, and all signs point to coronavirus as the cause. Since the virus flared up on December 31, 2019, it’s killed nearly 2,800 of the more than 80,000 people it’s afflicted. Now, the world is taking measures to fight the bug, prevent its spread, and save the global economy.

According to the World Health Organization (WHO), coronaviruses are a family of viruses that can lead to a variety of respiratory illnesses, including the common cold, Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). The strain that’s currently jeopardizing public health (COVID-19) originated in mainland China, where it’s killed over 2,700 people. It was first transmitted from animals to humans in Wuhan (the capital of China’s Hubei province and a major city of commerce), and has since spread all over the globe. The countries with confirmed cases of coronavirus have set up mandatory quarantines for the sick and include South Korea, Japan, the Philippines, Italy, and Iran. Health officials have confirmed all instances are connected to the first case.

Not only is coronavirus threatening public health, it’s also crippling the Chinese economy and supply chains around the world. The Chinese government has accounted for 78,000 cases, established mass quarantines throughout the country (with more than 20 of them in Wuhan alone), and closed companies and schools. This nationwide lockdown has disrupted business operations and created a range of challenges for freight companies, from restricted port access to roadblocks.

Chinese freight workers haven’t been able to send unloaded shipments to their final destinations, and loads have started to accumulate at drop-off locations. Even if trucking routes were accessible, few drivers are available to transport loads. (A large percentage of them live in heavily impacted Hubei and nearby provinces.)

According to JOC, trucking activities in central China are only operating around 20-40%, with critical conditions facing the Zhejiang Province, particularly Ningbo. This region is almost entirely shut down, and only 10-20% of its trucks are in use. However, the same piece notes “…capacity is much better in north China with around 70-80% availability…”

China has the second-largest economy on earth and a global supply force. Because its business ties span the planet, the productivity decrease has triggered negative economic repercussions across the world. Investors have responded in turn and tightened their purse strings, which caused big dips in stock markets this week. The Dow Jones Industrial Average dropped over 1,000 points on Monday, and freight share values fell drastically. Airlines have been hit especially hard, calculating billions in lost earnings. Ocean carriers aren’t faring much better; many are experiencing sharp declines in revenue.

Companies all over the globe are bracing for reductions in output and adjusting their expectations for Q1. According to Forbes, China’s slowdown “…could cause gaps in worldwide availability of many raw materials, intermediate goods, and finished products.” Impacted Chinese exports include oil, gas, copper, and manufactured products (like technology, auto parts, and retail goods).

The United States imports most of the goods it consumes. FreightWaves notes “Chinese imports accounted for roughly 40% of the shipments entering the U.S. in the last month”, and 7% of sea shipments from China to the West Coast (of the U.S.) had been cancelled as a result of coronavirus.

The longer China’s downturn lasts, the more it will hurt manufacturers. Vining Sparks cites car companies—common customers of U.S. freight companies—as examples. Its Portfolio Management Group division writes, “Hyundai and Renault have already announced plant closures due to supply issues from [mainland] China. Fiat Chrysler has warned…it might need to halt some production in Europe due to supply chain issues.” If the slump persists, not only will freight companies have less product to transport, but manufacturers will run out of goods to sell.

Shannon Newton, President of the Arkansas Trucking Association elaborated on the situation: “With the virus still not contained and potential treatments or vaccines unknown, it is hard to predict the peak or ultimate impact on the world’s economy. But given that trucking is the primary mode of transportation for all consumer goods, and the majority of consumer goods are sourced at some point from China or other Asian countries, the impact, while temporary, is potentially substantial.” Only time will tell how the coronavirus outbreak will impact industry and the worldwide population.

In the meantime, authorities are paying close attention to new developments. While the WHO hasn’t declared coronavirus a pandemic, drug companies are working together to produce a cure, health institutes are organizing clinical trials to test antivirus drugs on coronavirus cases, and governments are preparing emergency plans and educating the public on the disease.

The Centers for Disease Control and Prevention (CDC) warns coming into close contact with an infected person puts people at risk of infection, especially if the infected person sneezes or otherwise releases germs into the air. Early symptoms are similar to those of a common cold and include cough, runny nose, sore throat, and nasal congestion. However, if they worsen to fever, shortness of breath and aches and pains, the immune system may be compromised. At this point, healthcare providers recommend seeing a doctor. For more information, visit the CDC’s coronavirus web portal.

Once coronavirus is contained and shipping picks up again, Flock Freight will be there to help shippers and carriers deliver loads.