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NewsTruckingTruckload

Crisis or hype? Industry insiders have differing views on coronavirus

Transportation Insight expert believes consumers could see 15% increase in prices and survey finds medium to high impact over the next three months, but some are not convinced

Rick Brumett, Transportation Insight vice president of client solutions, said the 2003 global outbreak of severe acute respiratory syndrome (SARS) caused a 2.3% reduction in global economic expansion. The current coronavirus (COVID-19) pandemic could triple that, he said.

“When the coronavirus started to hit epidemic proportions, the Chinese New Year was in full swing. Logistics companies always factor in this anticipated shutdown, which lasts until Feb. 14. Everything was close to normal,” Brumett said in a statement issued by Transportation Insight. “Now, international supply and demand is at work.”

Brumett noted that the global economy is different today than it was in 2003, with just-in-time inventory systems and e-commerce firmly rooted in manufacturers’ operations.

“Because there is less supply, costs go up,” Brumett said. “Now, the just-in-time mindset of LEAN manufacturers is seriously challenged by the fact that Asian factories are at 40% to 70% of capacity and oceangoing vessels and ports have been closed. Prices could increase 15% or more.”

Vivek Vaid, chief technology officer for FourKites, wrote that container traffic from China is even steeper than anticipated.

“The impact of COVID-19 is hitting Shanghai particularly hard. Shanghai is one of the world’s busiest ports,” he wrote. “It is also close to the Wuhan region, the epicenter of the coronavirus outbreak. In February, load volume leaving Shanghai had plummeted nearly 78% compared to previous months.”

The Port of Long Beach reported a 17.9% year-over-year drop in imports in February.

As imports drop and experts begin to discuss the economic impact, a Morgan Stanley survey has found that half of all respondents still believe the impact is “low.” The survey of 350 freight transportation participants found that 80% of stakeholders were seeing an impact to their business from coronavirus, up from 60% just two weeks ago. About half expect a medium to high impact in the next three months, but respondents did not agree on what that impact will look like, and their interpretation depended heavily on their operations.

“Very little coronavirus issues in the flatbed world except in the areas of imported steel etc., but even that hasn’t changed much,” one operator commented in the survey. “However, slow import activity is freeing up vans which are butchering flatbed rates if they can haul anything.”

Other carriers called the current situation “fear mongering” or “overblown,” and said that “if the media would quit over-hyping it there wouldn’t be a problem.”

Some, though, are seeing real impact.

“The coronavirus impact is high on lack of freight coming out of the ports. The impact we anticipate in three months is also high when things start coming into the ports and there’s an over-abundance in freight and not enough capacity. Carriers are avoiding the West Coast now and may be changing their network to avoid it,” one said.

Another reported consumer buying habits are causing a lift in the market.

“Stores [are] starting to restock their shelves from consumers buying 2-4 weeks of supply is causing a lift but not a peak,” they wrote.

Several shippers downplayed the impact, suggesting that the news is fueling much of the impact.

“The primary impact on our volume is related to sales spikes from consumers hoarding products from our retail partners’ shelves,” one said, with another saying they “think hysterical reports [are] fueling a lot of noise versus objective reporting. Serious, absolutely. Impact found is minor.”

One shipper said they anticipate rates dropping because of a drop in port volumes that will free up capacity, and still another said there was no impact on their domestic shipments at this time.

A broker suggested that, at this point, the impact is due more to companies preparing for the virus than the virus itself.

“Retailers and grocers are struggling to keep product on the shelves due to surges in demand. This will eventually flow through to supply chains and there will be large and volatile surges to replenish depleted store shelves,” said another broker.

Brumett advised companies to develop backup plans for source material, if they have not done so.

“Buying American or buying locally has a nice ring and offers short-term solutions,” he said. “Consumers will be suspect of goods produced in Asia and Europe for now. We cannot blame them.

“As we consider who wins and who loses in a coronavirus world, it is easy to say the strategic advantage goes to the competitor who has been planning, testing scenarios, establishing a crisis team and implementing the plan. At any time, a country could close its doors. Those companies without a backup plan will feel the effects of the Coronavirus for the rest of the shipping season,” Brumett added.

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Brian Straight

Brian Straight covers general transportation news and leads the editorial team as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and fleetowner.com. Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler.

7 Comments

  1. I was surprised going out today a little before noon and seeing all the people at the grocery store. They have escalated sending people to work from home. Could this create a bigger shift in online ordering?

  2. This thing is bad . We have been told cross border freight will be effected. Many homeless and O T R truck drivers are high risk of infection. Something has to be done to protect these groups. I have been camped out at queens park since Jan 24 protesting the actions of my insurance company and the cuts to health care and insurance coverage to homeless and drivers.

  3. Avatar Noble1 suggests SMART truck drivers should UNITE & collectively cut out the middlemen from picking truck driver pockets ! UNITE , CONQUER , & YOU'LL PROSPER ! IMHO says:

    The article’s question is : “Crisis or hype?”

    I would say it’s a bit of both .

    Speaking for myself I’m not paranoid , nor do I fear death . That doesn’t mean that I’m not vigilant nor am I negligent . If I “need” to expose myself to risk then I will do everything I can to mitigate it . Whether it be around people, situations, or the markets .

    We have a contagious disease which is experiencing a worldwide outbreak . This must be taken seriously and one should exercise prudence . I never liked crowds and I avoid them . Believe it or not I avoid rush hours like the plague . I dislike waiting and being around large groups especially on the road .

    Statistics also indicate that more collisions occur during rush hour than at any other time during the course of a day .

    This is simply common sense based on the fact that more vehicles are around each other and being exposed to them increases the chance of a potential collision especially within certain speeds . That doesn’t mean a collision can’t occur elsewhere at a diminished speed . It simply means the chance of it’s occurrence is diminished when not in rush hour .

    If we were to analyse the mentality of drivers during rush hour we arrive to a logical conclusion that they are generally imprudent and due to such increase risks of collisions . We can then anticipate the same in regards to contagious diseases . They will tend to be negligent .

    Now due to the fact that the media is having a field day with the coronavirus outbreak and governments are literally shutting down draconian style to prevent its expansion as much as they can , the general population is in panic mode . A lot are self isolating themselves which is the main reason behind panic buying in excess . I view this as diminishing the risk of spreading the disease to another which mitigates the risk of catching the disease myself by not “isolating” myself .

    I would avoid line ups due to the possibility of a potential contaminated person standing behind me and coughing in my direction . That means I choose opportune times to go shopping to avoid line ups and I know the places I shop at very well . However, I’ve always done so most of my life due to disliking waiting . In my case there isn’t much that this outbreak changes in my life . I’ve always been prudent around people due to their tendency to be negligent . I don’t shop on weekends either due to crowds . Since I was a child I’ve always took toilette paper , wet it , put soap on it and washed the toilette seat and flush handle when using public toilettes . Then I would take toilette paper to dry it off before seating myself . Then wash my hands when done using the washroom .

    Normally as a truck driver I would time this moment with my shower time to avoid using a “public” stall and avoid sitting next to another . When using a urinal for number 1 , I would carefully pay attention to where I would place my feet due to a lot of men leaking their business on the bathroom floor in from and on the side of urinals . Most of you guys are aware of this . This goes to show you how many are negligent , lack hygiene and common courtesy .

    In conclusion , vigilance , common sense , and keeping a distance from people in public in general is all that is needed to remain safe at all times . Choose the one’s you keep close wisely . No need to panic . Observe and act accordingly .

    Most of these people panicking and over buying necessities due to their panic are using carts and place their hands on the filthy handle . Some then go to the fruit section and will pick a grape out of a bag and test it by consuming it right on the spot . From handle to fruit right to their mouth ? But they want to isolate themselves to prevent being contaminated ? LOL ! Good , those are the one’s we definitely need to isolate themselves . Worse in this “grape” example is if the person disliked the grapes and didn’t purchase the grapes in the bag which they touched when testing one . Now another person comes along and does the same , exposing themselves to the prior person’s filth on the grapes and puts a grape in their mouth to test it . Observe people and act preventively at all times , not just during an outbreak .

    How about “flu season” ? We can avoid being contaminated . We can avoid developing the microbe . Have you not questioned its origin ? What causes it every year ? Eating habits around Christmas holiday season ! Clinics and hospitals are bombarded and overwhelmed with flu cases every year ! I don’t develop nor catch the flu ! How come ? Because I understand its origin , development and keep my distance . I no longer shop at Costco’s due to the alarming lineups . I dislike waiting , remember ?

    In conclusion , without isolating oneself , one can prevent many risky exposures . Avoid exposing yourself to crowds and negligent people by observing them . Hygiene is number one . Understanding your organism is extremely important as well . Common sense isn’t so common . Don’t be paranoid , but be vigilant at all times , not just during outbreaks .

    Fear & greed unfortunately drive people to act irrationally . Do the opposite and you should be fine . Never “follow” the crowd blindly .

    In my humble opinion ………

    1. Have seen the way people live in homeless shelters in the cities. They sleep on dirty floors with one working shower for 200 people with showers only open 4 hours per day. A meal of crackers and glass of water. 10 percent in wheelchairs. No paper towels to wash or clean up with 20 percent of the people with a bad cough . A ambulance is there 1 to 3 times per day people sleeping on chairs all night. I am not afraid of death. Most people in the shelter have seen someone die within 100 feet of them. These people are a good way for this disease to spread. It is already in the homeless shelters in New York City and in at least one shelter in Toronto Canada. The government is doing so called isolation for people coming in but doing little to protect truck drivers. I found out that insurance companies give you coverage until you need it for something bad then complain when a judge awardees against them for delay of a claim.

    2. Avatar Noble1 suggests SMART truck drivers should UNITE & collectively cut out the middlemen from picking truck driver pockets ! UNITE , CONQUER , & YOU'LL PROSPER ! IMHO says:

      I just came back from grocery shopping . People were in the supermarket . One negligent elderly woman coughing around badly .

      However , I watch out for potential sick people all year round due to their negligence in public .

      Anyways , the point I wanted to make is there was nobody in line at the cash register in front of me when I arrived at it , nor behind me when I was cashing out (wink) .

      We can time our needs and be quick in and out . That’s the way I like it all year round !

  4. Avatar Noble1 suggests SMART truck drivers should UNITE & collectively cut out the middlemen from picking truck driver pockets ! UNITE , CONQUER , & YOU'LL PROSPER ! IMHO says:

    FURTHERMORE ,

    Apparently the gods have heard the truck drivers screams for a shut down . Now we have one which is favouring certain divisions in the trucking industry , PUBLIC PANIC due to a worldwide spreading contagious disease leading to governments taking preventive measures and shutting down their countries , some leading to extremes !

    At first the lockdown was in China due to the over crowed population spreading the disease with ease .Though it was viewed as an “Asian” problem at first . Then it began to spread across borders at alarming rates in some countries more than others . Some worse than others based on their cultures such as in Italy due to their habit to kiss one another when they greet one another .

    Then people around the world started to panic and over buy essentials due to lockdowns potentially occurring in their countries as well . The media kept reporting and still is concerning governments locking down . This just feeds into the snowball effect and increases public panic into increasing over buying essentials .

    Many stores are depleted . In some countries such as in Canada , retailers find that the public has lost their minds and are starting to say the media is over doing it . The media had started to change their tune a little . They have begun to report that it’s a time to be cautious but not to panic . However, the numbers of infected keep on climbing . Once a crowd starts to panic and are in full panic mode , it’s not so easy to stop the panic swing , especially when government acts contrarily to what they state ,ie: “don’t panic everything is under control but we’re shutting down as a preventive measure” , LOL ! This will lead the crowd to panic even more .

    The US now declaring a national emergency is certainly not helping the panic situation .

    Some retailers had to call in law enforcement for crowd management in Canada .

    I’ve seen the media reporting that a doctor came back from a trip in Europe and began consulting patients and began to feel coronavirus symptoms . Apparently the doctor was infected on his trip in Europe and rather than getting tested and remaining isolated until the tests were returned with the results , he neglected to act preventively and began to interact with patients . Those patients have not felt any symptoms yet but have been tested and are awaiting results . The doctors results came back positive for the coronavirus .

    This goes to show you that even doctors can be and are negligent and ignorant , and above all times during a crisis . They may be book smart but some lack intelligence .

    We need to exercise good judgement . Observe and be vigilant . We too must question people when we interact with them . Have they been on a trip lately or coming back from one from out of the country ? Are they experiencing coughing , or difficulty breathing , and or feel feverish etc . Have they been in contact recently with a person experiencing such symptoms ?

    Be vigilant and don’t just trust blindly that people will act with good sense no matter what their status may be .

    In my humble opinion …………

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