How has CORONAVIRUS affected logistics from China to Paraguay?

Since the beginning of 2020, the entire planet has had its eyes set on China by the appearance of an outbreak of the coronavirus Coravid-19, which to date has caused more than 1,500 deaths and has made more than 66,000 people sick, including several cases outside this country.

This epidemic has caused a technical closure, for health and safety reasons, of more than 80 percent of Chinese industry, affecting in turn dozens of countries, such as Paraguay, maintain a large commercial exchange with the Asian giant.

The mobilization of cargo and passengers by air, land and sea was even more restricted, even with the total closure of cities such as Wuhan, Hubei Province, where the first case was identified on December 31, 2019 and where more victims They have registered.

How does the coronavirus problem affect Latin America? We will detail some aspects of this situation.

Sanitary controls affect freight logistics

The Chinese government has made great efforts to reduce the spread of Coravid-19.

Among the most drastic measures is the blockade of the city of Wuhan, whose population is prohibited from traveling to other regions without first going through quarantines and strict sanitary controls.

Wuhan is the main commercial area of China, as it is located in the middle of the Yangtze River and from there you can transport cargo and passengers in a few hours to anywhere in the country.

Wuhan also serves as a maritime liaison with Japan, South Korea and other Asian countries, so that by decreasing or ceasing the passage of ships through their ports through strict sanitary controls, freight logistics to these countries was also affected.

The situation is complicated because both shipowners and crews start to worry more and more about the risk of contagion when carrying cargo to Chinese ports, as an American Shipper portal report points out.

Companies like Hyundai are reporting delays in their car production due to the lack of parts manufactured in China, which are mainly brought by sea.

In addition, Colombia, Peru and Brazil, the main destinations of Chinese products in Latin America, have seen the decline in imports of machinery, appliances and auto parts since the contingency plan against the coronavirus was activated.

To this is added that the cessation of production in many Chinese companies has caused a decrease in demand for raw materials such as iron, steel, aluminum and oil, affecting the volume of sea freight from the producing countries of these inputs.

Effects of coronavirus on air logistics from China

Reports from numerous operators indicate that the coronavirus crisis is increasingly affecting air cargo shipments to and from China.

Sanitary cargo review protocols cause shipping delays.

To this is added that air carriers must wait longer for cargoes to arrive at the collection centers near the airports, due to restrictions on their mobilization within China.

Some experts fear a paralysis of air transport in China if the epidemic is not controlled.

However, the most affected sector is passenger transport, since delays in the air cargo of products can be partially compensated by changing to the mode of maritime transport.

On February 10, the State Department and the US health authorities urged the citizens of that country to avoid trips to China that are not essential or even avoid traveling until the epidemic ceases.

At the same time, air travel between mainland China and Hong Kong is restricted, although the airports of Beijing, Shanghai and Hong Kong remain active for now.

Even so, many foreign airlines have announced temporary suspension of flights to China to protect the health of their crews and passengers.

The problem is that wide-body passenger airplanes also carry cargo and their absence would cause a deficit in transport capacity that would not be easily covered by the current fleet of available cargo planes.

Data published by the German agency Deutsche Welle indicate that in July 2019, 50 passenger flights per day were registered between China and the US, against only 17 cargo plane flights.

How does coronavirus affect maritime traffic?

In the case of Paraguay, it is one of the ten countries that import more Chinese products in the continent, especially in the area of electronics, agricultural machinery and household appliances.

Many Latin American countries also export to China and do so at 95% by sea such as Venezuela that sells oil, Colombia and Chile that supply cultivated products and Peru, which exports a large amount of marine products.

Chile and Peru are the most affected by the effects of the coronavirus on maritime transport to and from China, according to a report by The Economist.

Chileans allocate 33 percent of their exports to China, while Peru sends 25 percent of its products to that nation, a figure similar to Brazil although the Amazon country has a greater capacity to redirect its sales to the US and Europe.

One of the most affected sectors is that of marine products and perishable foods, key for Chile and Peru, since they cannot be exported to China at this time.

There are currently more than 1,400 containers with Chilean agricultural products dammed in Chinese ports.

This is because there is not enough customs, ground service and transport personnel to guarantee their rapid mobilization, storage and refrigeration.

What options do logistics companies have before the outbreak of coronavirus?

At the moment it is expected that thousands of Chinese companies will be reactivated after the Chinese New Year’s holiday in mid-February, starting with those located in areas where the Coravid-19 it has not appeared or the situation is controlled.

In fact, the government of that country has indicated that a short extension of the restrictive measures will be applied in the main ports and airports, but by the end of February everything would be in the process of reactivation.

China is confident that the outbreak will be contained in a short time and the transport of cargo and passengers could be reactivated, at least in areas that have not registered cases of Coravid-19.

The expert Jéssica Gomes, of the German institute GIGA, considers that some economic groups, such as the Common Market of the South (Mercosur), can withstand the effects of an extension in the restriction of the exchange of products with China, temporarily promoting greater trade between their member countries .

In his opinion, the supply and demand of products among Mercosur countries is high and varied, which would allow many regional companies to stay afloat when exporting and importing locally while the Chinese ports are reopened.

Gomes is confident that Coravid-19 can be controlled by China with the help of several countries , as everyone understands that a total collapse of that country’s economy would affect the entire world.