Coronavirus is still making headlines, recently prompting the CDC to issue a warning for the United States. The highly contagious virus continues to wreak havoc on consumer sentiments around the world, and in turn, international economies. Analysts estimate that global demand will fall approximately 5% due to the temporary closing down of Chinese factories. Now, the shipping industry is bracing itself for the negative impact of Coronavirus.
How Stifled Airline Activity from the Coronavirus Impacts the Shipping Industry
Due to the widespread cancellation of flights in and out of China and Hong Kong, airlines are expected to lose a total of $29 billion in revenue until Coronavirus subsides.
Flight cancellations make for bad news for shipping carriers. This is because carriers rely on airlines to transport mail and parcels on international routes. Simply put, Hong Kong is a major international mailing hub. Without airplane traffic in and out of that area, carriers have significantly less options for transporting mail and parcels to that part of the world.
The good news is, airlines outside of the China area expect to only lose $1.5 billion in revenue. While that figure may not be as drastic as $29 billion, it still represents a significant loss in demand. This, in turn, means less opportunities for shipping carriers to load flights with mail and parcels…and that means less revenue for the carriers as a whole.
I Have Customers In Asia—What Should I Tell Them?
Some American shippers may not think all of this affects them, but in reality, it very well might. Shippers with customers in East Asian countries should be especially conscious of setting reasonable expectations with their recipients. Due to all the cancelled flights, packages headed to Asia may be in transit for extended periods of time. If they do arrive, it will certainly be much later than expected, since USPS recently suspended guarantees for Priority Mail Express International packages traveling to China and Hong Kong.
So, if you have customers awaiting packages in that part of the world, we suggest contacting them and letting them know their packages could be arriving later than anticipated. There’s no telling when airlines will resume their normal operations. Therefore, it’s best to set reasonable expectations while the Coronavirus continues to dampen international air transport.