As for the transition into the new normal, Omtra benefited from early preparedness.
“We have anticipated the governmental laws two weeks in advance, and this allowed us to make a light transition to working remotely,” Spadoni wrote. Still, she added, the company could have benefited by having more sanitary masks and disposable gloves before the outbreak began.
Impacts to shipping
Finding shipping containers to go overseas has been a major challenge in recent months, according to Gloyd of URT.
“Shipping containers might be available but they can’t leave the ports in China, Malaysia, Hong Kong,” he said.
During the first quarter of this year, shipping lines reduced the numbers of sailings across the Pacific Ocean. According to The Wall Street Journal, containership operators as of early March had cancelled over 110 sailings bound for North American ports; normally, there are about 200 containership sailings across the Pacific a month.
The reduction came as Chinese factories produced fewer goods and the Chinese logistics industry has struggled to move products to and from ports. Because of the production slowdown, fewer ships are needed to bring goods to North America. As a result, fewer ships and containers have been arriving on U.S. shores, meaning fewer were available to make the return trip to Asia.
The Wall Street Journal reported U.S. railroads and truckers serving ports are also being affected, with drivers struggling to pick up and drop off containers because of reduced gate capacity at ports. The Los Angeles Times wrote about the disruptions hurting truckers and dockworkers at the ports of Los Angeles and Long Beach, the busiest ports in the Western Hemisphere.
The China Scrap Plastics Association (CSPA) reports that factories are slowly resuming production, but they’re not near a desirable level. Logistics within China is heavily impacted, according to Steve Wong, executive director of the CSPA, with freight employees concerned about returning to work for fear of infections. This, Wong stated, is impacting the supply chain.
The coronavirus pandemic has massively disrupted ocean freight.
“Due to the coronavirus and less vessels operating, we have seen huge increases in ocean freight rates by double or even triple times the previous rate within the last two months,” Wong stated. As an example, he noted the freight rate for shipping from the U.K. to Hong Kong nearly tripled in the last three months, skyrocketing from $700 to $2,000 per container.
And despite the “unbelievably high rates,” Wong reported some shipping lines are fully booked through the end of this month.
Wong wrote that for the Asian plastics recycling industry, which remains the largest market for U.S. scrap plastics, the shipping situation has caused “an upset to the normal moving of plastic scraps to user countries in Southeast Asia and a short-supply situation is seen.”
A shipping company reported that freight strife within China may be starting to ease.
“Manufacturing activities are gradually picking up, more port workers and truck drivers are returning to their posts, and cargo flow is easing up at the major coastal ports,” shipping giant CMA CGM wrote in early March. “In short, business operations have now entered the recovery phase.”
Hitting stock values and the economy
Pandemic concerns sent global financial markets into wild fluctuation and spawned fears of an economic downturn. Financial institutions Goldman Sachs and JPMorgan in recent days predicted a recession will hit the U.S. economy this year as a result of the coronavirus.
Sims Metal Management, which owns global electronics recycling and ITAD company Sims Lifecycle Services, dropped to its lowest stock price in at least a decade and a half.
And waste management companies have seen significant stock value declines during the past week. Waste Management, Republic Services and Waste Connections essentially lost all stock-value gains they’d seen since early 2019.
Still, credit rating firm Moody’s on March 17 published a report showing the waste management sector as “largely resilient to coronavirus-related issues” under models employed by Moody’s. Global shipping, however, was classified as having “high exposure” to coronavirus fallout.
In part to stave off mandated closures of recycling facilities, the Institute of Scrap Recycling Industries (ISRI) wrote to the Trump administration, urging officials to designate recycling companies in all sectors as “essential” businesses.
Experts disagree about how long it will take for the U.S. economy to rebound from the turbulence. But a disruption in the U.S. economy, whether short-term or long-term, would certainly affect the scrap sector.
Adina Renee Adler of ISRI noted that scrap companies are the “first step in a supply chain,” so any time the manufacturing industries talk about supply chain disruptions, that includes scrap processors.
“Manufacturers curtailing production means they’re demanding less material, and we could have a supply glut again,” Adler said.
Associate Editor Jared Paben contributed to this report.
More stories about markets
