To all our Valued Customers
How China’s Virus Outbreak Could Threaten the Shipping Industry
The outbreak of a deadly disease in China has cast a dark cloud over growth prospects for the world’s second largest economy, raising fears about the global outlook if the mysterious coronavirus spreads or worsens. There are currently over 4,500 confirmed cases and 106 deaths. The head of China’s health commission warned that “the epidemic has entered a more serious and complex period.” Outside of China, additional cases have been reported in Asia, Australia, Europe, the U.S. and Canada. (A frequently updated infection dashboard using data from the World Health Organization is now online.) The government in Shanghai on Monday extended the Lunar New Year holiday to February 9, in an effort to keep the public at home and avoid spreading infection. Mongolia closed its vast border with China, and Hong Kong and Malaysia announced they would bar entry to visitors from the Chinese province at the centre of the outbreak. This is following a warning by medical officials that the virus’s ability to spread was growing.
Hong Kong leader Carrie Lam on Tuesday announced the suspension of high-speed rail and ferry links with mainland China. High-Speed Rail and Intercity Through Train services will be suspended from midnight Thursday, Lam said, adding that the number of flights to the mainland will be halved and personal travel permits for mainland Chinese to Hong Kong suspended.
Additional effects on the shipping industry are could be expected in several ways. We encourage shippers to inform their supply chain teams and customers as necessary.
Please contact your BRi Representative if you have questions on specific shipments and/or shipments with a specific deadline.
Costs Spiking due to IMO 2020
Adding insult to injury, the coronavirus threat is transpiring at the same time the shipping industry is introducing new fuel surcharges due to IMO2020 fuel regulations; particularly the dry bulk sector is having negative reaction to the much higher fuel bills of burning VLSFO. Since January 1, the IMO 2020 rule has required ships not equipped with exhaust-gas scrubbers to burn 0.5% sulphur fuel known as very low sulphur fuel oil (VLSFO) or 0.1% sulphur marine gasoil (MGO), not less expensive 3.5% sulphur heavy fuel oil (HFO). While many analysts, executives and investors have focused on the cost advantage of scrubber-equipped ships, the more important indicator is the year-on-year change in fuel costs as most ships do not yet have scrubbers installed. Most companies with plans to put scrubbers on all of their ships, have only installed a limited number so far due to installation delays at Chinese yards. These delays could potentially escalate due to the coronavirus if the outbreak restricts work at Chinese yards.
BRi Asia-Pacific Office Closures
Please note that BR International offices in China (Qingdao, Shanghai, Ningbo, Xiamen, Shenzhen and Hong Kong) will resume operations February 10.
BRi Hong Kong will resume operations on Thursday, January 30.
Trump Expands 232 Tariffs on Finished Goods Made of Aluminium and Steel
President Trump has expanded its Section 232 tariffs on finished goods made of aluminium and steel, effective February 8, 2020. The expansion covers certain imported nails, staples, electrical wires and some parts that go into automobiles and tractors, as well as other goods. The tariffs will apply to derivatives of aluminium products outlined in Annex I here, and would be subject to an additional 10% duty. Derivatives of steel products would be subject to a 25% duty, outlined in Annex II here.
The duties apply to imports of aluminium goods from all countries except Argentine, Australia, Canada and Mexico. The duties apply to imports of all steel goods from all countries except Argentina, Australia, Brazil, Canada, Mexico and South Korea.
Keeping you updated,
BRi Customer Solutions TeamBack to News Page