MEMPHIS, Tenn. – Measures to contain the coronavirus affect FedEx shipping services to and from China.
FedEx Express’ international priority freight and international economy freight shipments to China see longer transit times – ranging from one to three additional business days – because of coronavirus containment efforts, according to a company service alert.
Temporary service suspensions are in place for certain FedEx Express Europe-to-China services, including all international economy freight shipments, the alert said Feb. 20.
More than 2,800 people have died from the coronavirus outbreak concentrated in China, and more than 82,000 cases have been confirmed as the virus has quickly spread.
FedEx was among the companies that saw their stock prices tumble early this week amid worries over the spread of coronavirus. After closing at $163.25 per share Friday, FedEx stock traded at $145.10 Wednesday afternoon.
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The outbreak rattled global supply chains as air and ocean freight shipments were hit by “unavoidable service impacts,” FedEx Logistics said in a service alert Monday.
“With a reduction in the active Chinese labor force and business closures imposed by an extension of the (Chinese New Year) holiday, there are indications there could be additional potential impacts on global supply chains,” the company said.
FedEx Express listed 17 Chinese cities where pickup and delivery services are under a temporary service suspension, except for shipments tied to relief efforts.
Containment efforts also affect service outside China. FedEx Express said longer transit times would be in place for shipments to and from Vietnam, which borders China.
How much the coronavirus outbreak will affect FedEx’s business is unclear, but the company is heavily tied to the world economy. FedEx said Jan. 31 in an economic update that the coronavirus outbreak is among the risk factors for global economic growth.
FedEx Express was struggling before the coronavirus outbreak. The air cargo industry hit a rough patch in 2019, when the International Air Transport Association reported air freight markets had their weakest year since 2009’s global financial crisis. Demand fell by 3.3% from 2018 to 2019 as global trade growth slowed.
Air cargo demand could rebound in 2020 as trade tensions between countries fade, according to the IATA.
“While these are easing, there is little relief in that good news as we are in unknown territory with respect to the eventual impact of the coronavirus on the global economy,” IATA CEO Alexandre de Juniac said in a statement. “With all the restrictions being put in place, it will certainly be a drag on economic growth. And, for sure, 2020 will be another challenging year for the air cargo business.”
The coronavirus is expected to cause an economic disruption much greater than SARS, the virus that caused a global outbreak in 2003, did, said Moody’s Analytics chief economist Mark Zandi. China is a much more significant player in the global economy, he said in an analysis.
Retailers have not fully accounted for supply chain disruptions, said Oliver Chen, a retail analyst at financial services firm Cowen. E-commerce sales, a booming delivery segment for FedEx, will be pressured by containment measures, “given logistical challenges with shipping,” he said in a note.