Agro Perspectiva

Taiwan Impacted as Agricultural Trade Disrupted by Coronavirus

25.02.2020 15:25 "Agro Perspectiva" (Kyiv) — Following are selected highlights from a report issued by a U. S. Department of Agriculture attache in The Taipei (Taiwan), as of February 10, 2020, Taiwan is beginning to feel the trade impacts of the outbreak of the Novel Coronavirus (2019-nCoV) due to vessel delays and newly introduced country-by-country quarantine measures. Most international shipping vessels operate on routes or «strings» between major North American, Asian, and African ports. These vessels call on a series of destinations transporting consumer goods via containers to the United States and backhauling containers full of agricultural and other exports to major world markets. Any delay on a vessel string can have a cascading impact that reduces availability and increases costs to export shippers. Taiwan is normally not the only destination for container ships, neither is it the first stop in Asia, thus is it vulnerable to disruptions caused by the actions of neighboring countries. Australia and Vietnam have recently both announced 14-day quarantine requirements on any vessels outbound from China, thereby delaying vessels in transit through these major hubs. Other nations may follow suit. Seven of the world’s top ten container ports are in in China. Normally during the Chinese Lunar New Year - Spring Festival, most steamship lines (SSLs) skip one to two port call due to reduced demand and idled ports. However, to date, almost all major steamship lines, including Maersk, MSC, Hapag-Lloyd, ONE, and CMA-CGM, have announced additional vessel skips or delays. So far, Taiwan’s two major SSLs, Evergreen and Yang Ming, have been sending out private notifications but have not made any public announcement of additional vessel delays. Contacts report that international grain and other agricultural exporters are struggling to fulfill certain commitments due to logistical delays. Furthermore, contacts among grain traders are commenting that this is the worst period of delay since the 2015 U. S. West Coast port strike. To illustrate this, contacts in the trade report that some export shipments will be delayed to March or even April and that there is a risk of force majeure on existing contracts. Exports of livestock products could be disrupted as vessels risk idling off coasts to meet new quarantine requirements and closures could put existing shipments of perishable products stuck in port at risk for spoilage. These issues come at a time when many international shippers were already expecting increased costs as SSLs raise or impose higher low-sulfur fuel charges due to new environmental regulations. Offered prices are increasing as vessel space remains limited and nCoV-2019 adds to an increasingly challenging start to 2020. Air cargo is also being disrupted. On Monday, February 3, 2020, British Airways IAG Cargo cancelled all services to and from China for the remainder of the month. DHL has been quoted as reporting that there are, «severe disruptions to inbound and outbound air cargo shipments, trucking and rail cargo services.» Moreover, UPS announced an agreement with its pilot union that flying to China will be voluntary amid the continued outbreak. FedEx has announced that international flights have not been affected, but local logistics within China has. Many highly perishable agricultural products often move via air cargo, further increasing the strain on export shippers looking for alternatives given container delays. Again, logistical issues affecting China are expected to ripple outward to Taiwan and neighboring economies. In summary, U.S. agricultural exports to Taiwan and other destinations in Asia face many logistical and transportation challenges coming out of the Lunar New Year holiday due to the Novel Coronavirus and these are not expected to ease soon.