Flexport is monitoring developments of the Wuhan Coronavirus as it causes more and more business interruptions. Many major airlines are canceling flights to and from China. In some cases, the cancellations are comprehensive. Others have focused on specific routes. Most of the reductions are until the end of March—well beyond the Chinese New Year holiday.
A supply contraction like this is likely to cause volatile air cargo rates on multiple trade lanes, and air freight prices are likely to climb. In terms of impact on ocean, we are beginning to see some blank sailings. More about the global trade and economic impact of the virus can be found on our blog.
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Coronavirus Delays Cargo at Wuhan In an attempt to impede a global outbreak of coronavirus, Chinese authorities are selectively holding ships from calling at Wuhan, where the virus originated. The WSJ reports that many larger liners are calling as planned, with crews staying onboard and captains requesting masks, at this river port city that handles approximately 1.5 million containers annually.
WEF Report Identifies Vital Last-Mile Solutions The World Economic Forum (WEF) has released a report urging rapid adoption of logistics fixes — including electric vehicles, night deliveries, dynamic rerouting, and load pooling — to ease carbon emissions and congestion in cities. Supply Chain Dive highlights the report’s finding that last-mile deliveries will increase 78% by 2030.
Meanwhile, this week, Flexport Chief Economist Dr. Phil Levy noted the following economic highlights:
Additional Steel and Aluminum Tariffs President Trump announced more tariffs of 10% on certain steel items and 25% on certain aluminum items under Section 232. These tariffs will go into effect on February 8.
Fighting E-Commerce Counterfeits The Department of Homeland Security released a report detailing how the burden of combating counterfeit and pirated goods should shift to 3rd party sellers like Amazon, Ebay, Alibaba, etc. The report, which notes the limited utility of stopping and inspecting shipments as the volume of fakes increases, lists 10 governmental actions that will be implemented immediately and 10 "best practices" for 3rd-party marketplaces.
FDA Increasing Enforcement of FSVP To improve its Foreign Supplier Verification Program, the FDA has increased the number of notices issued and launched a public database tool to track warning letters. While importers now have more opportunity to correct possible violations, a lack of action could lead to fines and placement on the import alert list. Here is the final rule and a fact sheet for reference.
**For a roundup of tariff-related news, visit Tariff Insider.
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