Coronavirus Wreaks Havoc On The Global Shipping Industry
RACHEL MARTIN, HOST:
San Francisco is, of course, home to a very busy port. The vessels that travel in and out of there are being hit hard. The coronavirus is wreaking havoc on the entire global shipping industry, and this is all coming on the back of a protracted trade war with China. NPR's Jackie Northam reports.
UNIDENTIFIED PERSON: Driver, lane two, please stay on the mat (ph).
JACKIE NORTHAM, BYLINE: An enormous bright blue crane clamps onto a shipping container sitting on a flatbed truck, effortlessly picks it up, soars 60 feet in the air and stacks it on top of five other containers.
JOE HARRIS: I can tell this is a new crane operator; he's very slow. Usually, it's wham, bam, bam, bam, bam, bam.
NORTHAM: Joe Harris, a spokesman for the Port of Virginia in Norfolk, says the cranes are part of a new $800 million expansion here, the third busiest port on the East Coast.
HARRIS: There's a lot of moving parts out here. There's so many pieces to it. There are no incidental moves; everything is planned. It is truly like a watch.
NORTHAM: But the coronavirus has upended the precision planning here and at other ports throughout the U.S. and around the world. The global supply chain was interrupted when Beijing imposed travel restrictions in China. Manufacturing slowed. The docks were quiet. Chinese exports ground to a halt. As a result, cargo ships are being idled and dozens of sailings have been cancelled, says John Reinhart, the CEO of the Port of Virginia.
JOHN REINHART: There've been over 120 ships that were going to come to the United States that have been blanked. So that means they're not sailing. You know, for the periods of late February, March and April, you could be talking anywhere from 15% to 30% of the freight that normally flows in and out of this country will not be happening.
NORTHAM: The slowdown is affecting shipping companies large and small worldwide. Maersk, the world's biggest container ship operator, warned its earnings would be lower. Basil Karatzas, CEO of New York-based Karatzas Marine Advisors, says the past decade has not been good for shipowners.
BASIL KARATZAS: The demand has been growing at a slower rate than a tonnage supply so that all the shipowners right now do not have much money to spare.
NORTHAM: The disruption is having a severe knock-on effect for other parts of the shipping industry, says Weston LaBar, CEO of the Harbor Trucking Association in Long Beach, Calif.
WESTON LABAR: It's a bad time for everybody. There were 300 Teamster drivers that were laid off just last week because of the inability to have enough freight for them to move. We've seen employee drivers take a voluntary reduction in hours from some of our companies, as much as 25% to 50% of hours.
NORTHAM: Well over half of Chinese exports to the U.S. are unloaded in California, and the Port of Los Angeles, Long Beach, is the busiest complex in the country. Labor says 1 in every 5 jobs in Long Beach is directly or indirectly related to the port, and he says businesses are down 60% to 70% since the beginning of February. But LaBar says there is a flicker of hope; the coronavirus is starting to ease up in China.
LABAR: We're hearing from many of our customers that manufacturing is starting to pick back up in China, that the ports in China, especially the main, large port in Shanghai, is now getting back to full operations. And the hope is that in a week or two, maybe we can start to dig ourselves out of this and get back to full operations.
NORTHAM: But LaBar says there is a challenge ahead to consider - whether the coronavirus spreading across the U.S. will affect port operations here as it did in China.
Jackie Northam, NPR News.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.