International Shipping & Freight Forwarding Blog

International Shipping, Hurricane Sandy Delays Asia Shipments

Posted by Reid Malinbaum on Mon, Nov 05, 2012 @ 10:38 AM

Reid/ ETC International Freight System

www.etcinternational..com

International Shipping, Air, Ocean, Global LogisticsFurther update on Hurricane Sandy and shipments destined to Asia through JOC news.

 

 

Sandy Delays Asia Shipments

SINGAPORE -- Shippers in Asia should expect delays for air and ocean shipments to the U.S. in the wake of super-storm Sandy, which devastated parts of eastern U.S., including New York and New Jersey on Monday.

Airlines across Asia have canceled flights into the northeastern U.S.,  and integrators warned that delays should be expected on expedited deliveries.

Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics, said supply chain delays could drag out for a number of days. “Most carriers canceled their flights yesterday (Monday), and weather conditions today will determine flight departures today,” he said. “I think there will be some delays due to backlogs at JFK, and everyone has to monitor very carefully their shipments, particularly those that are time sensitive.”

Singapore Airlines and Cathay Pacific have canceled flights to and from JFK scheduled to depart Tuesday and Wednesday due to the closure of JFK airport.

DHL has delayed one trans-Atlantic flight into JFK airport that will lead to an expected delay of one day for some shipments into and out of New York City and surrounding areas. Deliveries and pickups are expected to resume on Wednesday.

“We cannot operate into New York while airports are closed, so any shipments from Asia-Pacific will be held in Cincinnati until they can be transferred and we resume service,” a DHL spokesman said. “We are also reviewing contingency options for a small number of airports that are closed in the Bahamas region, and are monitoring the situation closely with regard to other cities in the affected area.”

Maersk Line said it had directed its vessels to the open seas, where it was safer to weather Sandy in line with U.S. Coast Guard advice.

“We expect the terminals in the New York area and in Virginia to remain closed/impacted by Sandy for a couple of days,” the carrier said in a statement. “This will cause disruptions to Maersk Line's operations in North America.”

 

CMA CGM's offices in New Jersey are closed until further notice, but the French carrier's U.S. headquarters are open in Norfolk, Va., a spokesman said. Some vessels are waiting outside the port and will berth as soon as soon as the terminals reopen. Others have reduced speed on the way to New York in order to arrive when conditions are safe and terminals ready, he said.

"At this stage, no vessel has deviated to another port, and customers will be able to take delivery of their cargo once discharged" in New York-New Jersey, the spokesman said.

FedEx said shippers moving cargo and parcels into impacted areas should contact recipients to verify if they can accept deliveries. “If not, FedEx has ‘Hold at Location’ services that allow recipients to pick up shipments at a location near them,” the company told The Journal of Commerce. “Meanwhile, please note that the Money Back Guarantee does not apply to delays of this nature that are beyond the control of FedEx Express.”

UPS also confirmed that its package guarantee did not apply when transportation networks were disrupted. It said pickups and deliveries were disrupted in part or all of Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, and Washington, D.C.

For continuing coverage of the storm and its aftermath, see the JOC's Hurricane Sandy special topic page.

Sandy's Long Economic Reach

Hurricane Sandy will have a devastating impact on life and property. However, gauging its ultimate impact on an economy still struggling to overcome the Great Recession but with substantial resources to overcome adversity is far more complex than merely adding up insurance payouts and uninsured losses.
 
Disasters can give the ailing construction sector a boost, and unleash smart reinvestment that actually improves stricken areas and the lives of those that survive intact. Ultimately, Americans, as they always seem to do, will emerge stronger in the wake of disaster and rebuild better, making a brighter future in the face of tragedy.
 
Sandy is unusual storm and complex to gauge. Coming late in the season and combining with cold fronts to the west and north, it is really a post-tropical cyclone and has the potential to deliver epic destruction. However, coming so soon after Irene in August 2011, the level of anticipation and preparedness demonstrated by federal and state officials is commendable and should mitigate some losses, especially loss of life.
 
Early estimates of the direct damage caused by Hurricane Irene were in the range of $7 billion, but ultimately it inflicted $15 billion to 20 billion in damage.
 
It seems likely that Sandy will impose greater destruction of property, and add to that the loss of about two days commercial activity, spread over a week across 25 percent of the economy, an initial estimate of the economic losses imposed by Sandy is about $35 billion to $45 billion.
 
However, rebuilding after Sandy, especially in an economy with high unemployment and underused resources in the construction industry, will unleash at least $15 billion to $20 billion in new direct private spending — likely more as many folks rebuild larger than before — and the capital stock that emerges will prove more economically useful and productive.
 
Regarding the latter, consider a restaurant with inadequate patronage: its owner invests the insurance settlement in a new more attractive business. On the shore, older smaller homes on large plots are replaced by larger dwellings that can accommodate more families during the summer tourist season. The outer banks of North Carolina saw such gains several decades ago after rebuilding from a storm of similar scale.
 
All of this is not to discount the direct costs to individuals by temporary, and in some cases permanent, disruption to lives and communities, much of which cannot be quantified. However, when government authorities facilitate rebuilding quickly and effectively, the process of economic renewal, in many tangible ways, can leave communities better off than before.
 
Factoring in the multiplier effect of $15 billion to $20 billion spent, rebuilding yields an economic benefit from reconstruction of about $27 billion to $36 billion. Add to that the gains from a more modern and productive capital stock — likely in the range of $10 billion — and consumer and business spending that is only delayed but not permanently lost —likely in the range of $12 billion — and the total effects of natural disasters of the scale of Sandy are not as devastating two years down the road.
 
Peter Morici is an economist and professor at the Smith School of Business, University of Maryland School. Contact him at 703-549-4338 or at morici@rhsmith.umd.edu.
 
 
 

Tags: International Shipping, Freight Forwarding, International Air Freight - Global Logistics, Freight Forwarders in California