Update: Coronavirus Impact

February 26, 2020

Dear Valued Customer,

Each day we are finding marginal improvement in China, however we need to stress that the situation is far from resolved. This week we have seen more factories and offices resume their operation, however Hubei and Zhengzhou provinces are still under restriction. Chinese authorities are lessening some restrictions on inland transportation, however there is still a shortage of drivers available. All factors considered, there are many organizations deciding to postpone operations until March 2nd.

There is an increase of infected cases in other countries in Asia and Europe, including South Korea (1200+), Japan (800+), Italy (350+), Iran (120+), and Singapore (90+).

As Europe’s most impacted country, certain parts of Northern Italy are taking precautionary measures like telecommuting and school closure to avoid the spread of the disease. The mishandling of the initial Coronavirus cases has now led to a spread into European countries including Germany (15+), France (15+), and Britain (10+), and as far as Brazil.

Ocean Freight:

With China slowly resuming, and the announced blank sailings, a surge in demand is expected in the coming weeks. Ocean freight rates through February 29th should remain the same. There is a possibility of GRI/PSS on March 1st, with some carriers extending rates to March 15th as the increase in demand is expected only in the back half of March.

Carriers are projecting equipment shortages from the following export origins:

– Atlanta, Chicago, Cleveland, Columbus, Dallas, Detroit, Kansas City, Louisville, Memphis, Nashville, Phoenix, Toronto

We are monitoring the situation closely and will provide updates in the coming days.

Air Freight:

More U.S. airlines are upholding suspended flights to and from China until the end of April. With the increase in infected cases in Asian countries, some Asian airlines have reduced their passenger flights, limiting the amount of belly capacity available. Charter flights coming out of the region are largely pre-booked by the bigger shippers through March, with the expectation that China will resume production in March.

Once production resumes normally, demand for airfreight will create capacity shortages. Air cost is already showing a spike this week, and we can expect air costs to increase in the coming weeks.

European carriers have suspended flights to and from China until the end of March. We are currently seeing restrictions into Milan and are monitoring further restrictions as the virus spreads.

Please contact your local Masterpiece representative with any questions.

Thank You,

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