How will the coronavirus affect industries?

How will the coronavirus affect industries?

How will the coronavirus affect industries?

Background on the Virus

A new strain of coronavirus has infected thousands in China and other countries including the US, Singapore, Australia and France. The death toll has recently exceeded more than two hundred and experts fear that this may lead to a global pandemic. Closely related to the Severe Acute Respiratory Syndrome (SARS), the symptoms caused by the virus seems to be less aggressive as compared to SARS. The symptoms include fever, breathing difficulties and coughing. Officials believe that the virus has an incubation period in humans, of 1 to 14 days. Even while carrying the virus, an infected individual may not display symptoms. Thus, the virus is able to spread even before symptoms appear. 

Data accurate as of 31 Jan 2020, 1.36pm. (Source: CNA)

Affected Industries

The sudden appearance of the deadly coronavirus will bring about severe consequence to various industries around the globe. Here are some industries that may be or have already been affected: 

  • Healthcare
  • Tourism
  • Transportation
  • International freight
  • Manufacturing and production

Fear and panic causes shortage of hygiene products

As the outbreak worsens, the public has been stockpiling masks and other hygiene items in fear of contracting the deadly virus. Hoarding the masks and other hygiene items causes shortages for people who really need them. According to gov.sg, masks should only be worn by individuals displaying signs of respiratory symptoms such as cough or a runny nose. Healthy individuals need not wear masks. More information regarding how and when to wear masks can be found here. 

Tourism and transport takes a hit

With city lock-downs and reduced air travel demand, the tourism industry is bound for a tough journey ahead. Many airlines have cancelled flights to China over deepening fear of the virus. Tourist hot spots such as Hong Kong Disneyland and Shanghai Disneyland, have already announced their closure due to the pandemic. Public transport within multiple cities in China has also been suspended. The international public is advised to postpone all non-essential flights towards Mainland China while the Chinese government has announced that the purchase of overseas tours, flights and hotels abroad, will be banned for citizens. 

Manufacturing and production weakened

Ftech, a major car parts supplier to automobile company Honda Motors, is relocating its brake pedal production from Wuhan to the Philippines. Due to the outbreak, Ftech has ceased operations in its Wuhan factory indefinitely. Ftech sees this as a temporary solution and expects to produce its brake pedals in the Philippines for the time being. Eventually shifting production back to Wuhan when conditions improve. If the coronavirus outbreak worsens, other companies are likely to follow Ftech’s move. Multiple automobile and semiconductor companies have production bases in Wuhan, should they choose to relocate or suspend operations in Wuhan, it will undoubtedly impact the international supply chain. 

How will the logistics industry be affected?

Trade restrictions and tighter screening measures

With potential trade restrictions on goods from China looming, to prevent the spread of the coronavirus, a probable deceleration of international trade volume is on the horizon. China is the world’s largest exporter and many countries such as Indonesia and Malaysia have expressed safety concerns regarding imported goods from China. Governments around the globe are already implementing stricter biosecurity measures on imported goods while some are considering whether to impose import restrictions during this fear-stricken period. Risks including closure of ports and quarantine processes should also be taken into consideration. 

Charter party issues concerning shipowners

Shipowners should be wary of resulting charter party issues due to the outbreak. If a crew member is suspected of any illness, it is highly possible for the entire crew and vessel to be quarantined. To combat the spread of the coronavirus in Singapore, the Maritime & Port Authority of Singapore (MPA) has started mandatory temperature screenings for all arrivals at PSA Terminals, Jurong Port and all cruise and ferry terminals. 

Online retail and its correlation to logistics

International shoppers are increasingly concerned about packages from Wuhan and from the rest of China. However, according to one Malaysian doctor, as reported by Sin Chew Daily, all parcels from China take at least 24 hours to reach its destination. The shipping duration effectively reduces the risks of transmission as the virus is unable to survive on non-living things for long periods of time. Additional measures have been put in place by China Post’s Express Mail Service (EMS) announcing that it will delay all shipping orders to double disinfect parcels and vehicles that will go through Wuhan. Albeit parcels being relatively safe and virus-free, there will be skeptical shoppers who would curb their shopping habits during this time. Chinese B2B online wholesaler Alibaba and its B2C arm Aliexpress are likely to be impacted by the drop in orders. This drop in online shopping orders will naturally lead to lesser trade volume, impacting the logistics industry indirectly. 

Potential consequences of import restrictions

If import restrictions were to happen, international trade would decline, naturally leading to lesser containerised cargo being moved. This could affect trucking companies, shippers and freight forwarders. With lesser cargo to move, some may find themselves without jobs as companies cut cost during this cargo-stagnant period. Chinese truck drivers who work outside of the Mainland may not be able to return to work if they went back to their hometowns to celebrate the Chinese New Year. According to the Straits Times, Mr L.J. Foo, a businessman in his 60s, advised an employee from Wuhan who went home for Chinese New Year not to return to Singapore. Cases like these will undoubtedly affect businesses to a certain degree. 

Recommendations

During previous outbreaks such as SARS, human-to-human transmission occurred, suggesting that transmission of the new Wuhan coronavirus can be similar. The basic guidelines to follow to reduce the general risk of transmission includes the following:

  • Avoid close contact with people who are suffering from symptoms 
  • Wash and sanitize your hands frequently, especially after direct contact with ill people and/or their environment
  • Avoid unprotected contact with wild or farm animals
  • If you are experiencing symptoms such as cough, practice good etiquette by maintaining distance when you cough and coughing into a tissue paper 

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