Logistics on the Quarantine. ACEX in Fight against the Coronavirus.

4/1/2020

Moscow, March 16, 2020 — An unexpected "gift" for the Chinese New Year in the form of a coronavirus made the whole world nervous. The economy of almost each country sustains enormous losses, awhile citizens stock up with masks and antiseptics for rainy day.

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Firstly, epidemic damaged transportation companies, in whose business the important place was taken by export/import from and to China.

Stephan Haltmayer“Air transportation to China make 38% of the total amount of export in our company. In import this indicator is 40%” – reports Stephan Haltmayer, CEO of Quick Cargo Service, ACEX Alliance partner in Germany.

In a consequence of a coronavirus the following “logistic” picture is observed: trucks stand idle in China, cargo is in warehouses, and it causes expenses which clients of transport companies, naturally, are not ready to pay.

Ken HuiToday, the biggest problem for us is the fact that because of late working restart of the manufactories in China many products have to be delivered to the consumer in the shortest possible time period. It forces us to change a work vector, reducing the number of multimodal transportations in favor of increase aviation", – Ken Hui comments, CEO of FANS TRANS, ACEX member in China.

At the same time many airlines suspended or reduced the number of flights to China (both passenger and cargo) that means decrease in number of freight air transportation. This imbalance of supply and demand “drives the Chinese market crazy” therefore, airlines increase the tariffs every two-three days, waiting time of sending freights can reach up to 7 days.

“Up to 90% of our export to China is paid in this country. Because of unplanned long holidays many banks are closed, and payments from China are delayed. We have to continue to make advance payments as the charge-back system of CASS IATA (cargo agents settlement system) charges our previous expenses on transportation. It also negatively affected the money flow of our company", – Stephan Haltmayer reports.

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Sea freight transportation also is under negative influence of crisis which the coronavirus has caused. Shipping companies operating from and to Asia, cancelled a large number of navigable flights.

Камран Алескеров“We should rebook container transportations for later dates, on still operating maritime lines, – Kamran Aleskerov, the director of AGGL, ACEX member in Azerbaijan comments. – Besides, the activity in cooperation fell, there was a delay in obtaining information on the statuses of various transportations from those world agents who forcibly do not come to work or work from home because of the virus”.

The economy in most countries has hard time in connection with reduction of trade turnovers between the countries now. People go shopping less in order to avoid visit of public places. It leads to decrease in sales of goods and, as a result, decrease in tax payments from profit: automatically the volume of goods purchases from abroad falls.

“Our clients begin to order regular transportations with longer intervals and the reduced parties in most cases” – Kamran Aleskerov explains.

Many Chinese companies cannot withstand a wave of crisis now: they are getting closed, go bankrupt, the companies fire their staff and reduce the salary.

“We expect that to the middle of this year the general unemployment will grow to 6-10% in Hong Kong and to 10-15% in China” – Ken Hui predicts.

Even those countries in which the coronavirus was found quite recently “experienced” economic losses in connection with it. By March 11, 2020 in Turkey only one case of a coronavirus was recorded, however the sphere of logistics began “to suffer” long before it.

Melis Oman Melis Oman, Business Development Director of AIRON TRANSPORT AND LOGISTICS, ACEX member in Turkey: “The main imported goods from China for Turkey are raw materials from which our country makes semi-finished products for export mainly to Europe. As a result, today export was reduced because of the shortage of raw materials for production”

The Russian logistic companies have already come up against this situation of recession.

Денис Бобраков“On import from Turkey we felt the deficit of containers for shipping, – Denis Bobrakov, ACEX Commercial Director in Novorossiysk comments. – The period of stagnation, according to our forecasts, will proceed to the middle of summer, and now the most important for transport companies of the world – to get through it, without losing means of work and valuable employees”

Many logistic events all around the world (more than 400 events and exhibitions) planned for this year are cancelled because of threat of the virus spread among participants.

Steven AlvesSteven Alves, Executive Director of GFFG, ACEX partner in the USA: “As the Executive Director of GFFG I was concentrated on the organization of our annual conference which had to take place in March in Bangkok. Instead we postponed an action to Berlin for September, but we continue to monitor a situation in the field of health care in the world”.

Epidemic of the coronavirus coincided with crisis in the world economy. The trade war of the USA and China, instability in the Eurozone, sanctions wars, protectionism and other problems obviously showed changes and the growing inefficiency of globalization in a long-term perspective for the current situation.

Мирослав Золотарев“China take unprecedented measures, having stopped industrial production in view of epidemic. All economies carry out the forced test for whether they can live without China and how to grow during recessions. In some sense there is a shift towards intraregional trade and the forced verification of new concepts and the strategy of the states” - Miroslav Zolotarev, ACEX Alliance Board Director comments.

But, despite this difficult situation in logistics, many companies manage to remain “afloat” using new alternative more expensive options of work.

Богдан Бутырев“Changes are obvious to the developed scheme of products deliveries: let's tell, instead of purchases of vegetables and fruit in China large retailers are reoriented on Morocco, Israel and Turkey – Bogdan Butyrev, Air Division Director of Nawinia, ACEX member in Moscow and the Far East comments. – It is necessary to deliver all this, too, and it demands from operators the change of the settled operational schemes, and urgent search of new partners”

Certainly, at the moment freight forwarders of the world companies cannot change the situation. Nowadays, the only exit for transport consists in observation of a situation, preservation of business by search of alternative methods for work and, eventually, quiet expectation of the epidemic termination.

Miroslav Zolotarev, ACEX Alliance Board Director: “A priority in this situation for us is preservation of partnership and communications with the companies in the Alliance and their further strengthening. The period of instability will end, and on a new round of development partnership will be appreciated above money!”

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