Novel Coronavirus | Logistics of China’s agrochemical industry under the influence of epidemic situation

Presently, China is still struck by the pneumonia epidemic caused by the novel coronavirus (2019-nCoV). Many cities and towns in China have issued strict epidemic prevention and control measures, and, consequently, the movement of personnel and road transport are seriously affected. Except those enterprises that are important to the national economy and the people’s livelihood, other enterprises are still unable to resume operation. As at 15: 36 on February 7, 2020 (Beijing time), China reported 31,232 confirmed cases of novel coronavirus pneumonia and 637 deaths.

Last week, AgroPages conducted a survey on the operation status of China’s major agrochemical companies and found that some of them kept production during the Chinese Lunar New Year. Therefore, in the short term, the production of products will not be greatly affected. However, the development of the epidemic situation is not clear at present, and it is not sure whether agrochemical companies will encounter short supply of raw materials in the future, which will have impact on production.

Over the past two days, we were informed by readers in China and abroad that due to traffic control in China and restrictions implemented by foreign ports, the logistics and transportation of goods are now greatly influenced. For this reason, AgroPages interviewed several experts from Chinese logistics companies and asked them to present the logistics information mostly concerned by our readers.

1. What is the current transportation situation of agrochemicals in China?

According to Zhang Mu, deputy general manager of Qiantang (Shenzhen) Int’l Supply Chain Management Co., Ltd. and general manager of Shanghai Branch, the domestic transportation is presently the crux of problem for logistics. The biggest problem is that factories cannot deliver goods to designated warehouses at ports. On the one hand, truck drivers are generally unable to return to work on time; on the other hand, even if they can return to work, trans-provincial transportation becomes extremely complicated due to epidemic prevention. Therefore, it is not sure when the logistics can return to its normal state.

Besides, it is not optimistic in the aspect of warehousing. Taking Shanghai as an example, more than half of packing workers and forklift truck drivers have not returned to their posts yet. The daily packing capacity drops by at least 40%, and warehouses have relatively large free space due to reduced quantity of incoming goods.

2. When can logistics companies start operation normally?

Yuan Guofeng, general manager of S&W International Chemical Logistics (China) Ltd., said that the company would start normal operation from February 10 according to the requirement of the government and has provided online services before that date. “The main problem now is the uncertainty of the future,” Mr. Yuan told AgroPages.

Li Xiaojin, business manager of Shanghai Oriland International Logistics Co., Ltd, said that logistics companies in Shanghai are currently expected to resume normal operation from February 10, but it is subject to the epidemic situation, which may lead to postponing the resumption of formal operation of enterprises by the government.

3. When can the Maritime Safety Administration of the People’s Republic of China (China MSA), China customs, General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ) and other government departments operate normally?

According to the interviewees, China MSA, China customs and AQSIQ have resumed their operation and can accept declaration and customs declaration, but the operation efficiency is not high and longer time will be needed. If the government would not postpone the resumption of work on February 9, everything would back to normal soon.

4. What are the impacts on shipping schedule?

The formalities such as booking space with shipping companies, customs declaration and declaration of dangerous goods can still be handled as attendants are dispatched to ensure the smooth progress of normal operation process. The main problem for the time being is that many shipping companies have suspended their services or cancel their calls to Shanghai Port. The frequency for ships to a destination may change from weekly to bi-weekly, mainly due to the sharp drop in import and export volume. If the problem of domestic transportation cannot be solved in a short period of time and the forecast on loads is too low, it is possible for shipping companies to further reduce the number of calls to Shanghai Port for the sake of economic benefits.

5. It was reported that the US requires ships to be quarantined for 16 days before landing. Is the news true? What are the restrictions of other countries on ports?

According to Yuan Guofeng, the latest regulation of the US government is for a ship and its crew members who have been to mainland China (except Hong Kong and Macao) within 14 days, if no crew member is sick, the ship can berth at a US port, but crew members must stay on board unless special activities are required. The 16-day quarantine is a rumor. Other countries such as Singapore, Australia, Vietnam and Brazil have similar restrictions. Different countries have different regulations for different ports.

Li Xiaojin added that a majority of countries adopt restrictions on visitors from China, and there are no countries that explicitly refuse or restrict the normal export of agrochemical products.

Zhang Mu mentioned that the pneumonia spreads mainly from human to human, and the virus left on goods, if any, should not be infectious after long transportation distance. According to the current ranges from China to the US, it will generally take more than 25 days from main Chinese ports to the East Coast of the U.S. and more than 13 days to the West Coast. Therefore, this regulation is of little significance and is unlikely to affect the actual operation of shipping companies. The only route which may be influenced is the one from Shanghai/Ningbo to Los Angeles, with an estimated range of 13 to 14 days. However, shipping companies can solve this problem technically by adding a call to Busan Port of South Korea or a port of Japan.

6. What are the solutions for agrochemical companies facing logistics challenges?

In the opinion of Zhang Mu, the situation is not too pessimistic. The sales will remain stable due to the rigid demand for pesticides, and according to the feedback of many customers, the demand in the international pesticide market this year increases a lot compared to last year. As long as the problems in China are solved, everything will soon return to normal.

Yuan Guofeng said that the epidemics would reshape the agrochemical supply chain. He suggested that enterprises in trouble should be prepared for future orders as soon as possible and attach more importance to upgrading online system as the future supply chain would operate fully online.

Li Xiaojin suggested maintaining reasonable communication between partners. Besides, Chinese companies need to know in time the conditions and information of the regions where the manufacturers and consignees are located and the location of major export ports, and carry out various types of coordination so as to operate normally in a timely manner upon receipt of notice return to work from the government. (From Agropages)

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