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INSIGHTS

Land transportation takes a beating amid COVID-19

Land transportation takes a beating amid COVID-19
Needless to say, the coronavirus has become a global issue. Its economic repercussions are felt in different industries, including transportation.
Needless to say, the coronavirus has become a global issue. Its economic repercussions are felt in different industries, including transportation.
 
Even though the World Health Organization still hesitates to characterize the so-called COVID-19 as a worldwide pandemic, the situation certainly feels like it. By the time this article was written, the coronavirus, which supposedly originated in Wuhan, China, had infected 114,422 in the world and killed 4,027, according to Worldometer. China, Italy and South Korea ranked as the top three in terms of number of infections, with 80,754, 9,172 and 7,513 confirmed cases, respectively. China has already locked down several cities, while Italy took an even more drastic measure on Mar. 9 imposing travel restrictions on the entire country.
 
The economic impact of the virus is felt throughout the globe. In Mar. 9 trading on Wall Street, the Dow Jones Industrial Average fell some 2,000 points, prompting a temporary halt to trading. Economic fears are spreading across various industries and vertical markets, for some of which financial losses have become real or inevitable.
 
One such vertical is land transportation, whereby operators of logistics, trucking, rail and public transit businesses have all expressed concerns for the financial impact of the coronavirus.
 

Widespread impact

 
One example is MTR Corp. of Hong Kong, which is already reeling from a drop in ridership in the wake of Anti-Extradition Act protests at the end of last year. According to the company’s 2019 financial statement, total patronage dropped 6.4 percent last year, with 2.5 percent growth in first half and 14.8 percent drop in second half. Now MTR is worrying that the coronavirus will take a further toll on the company’s business.
 
“In the midst of these uncertainties, particularly the recent COVID-19 outbreak, many of our businesses are being significantly affected. Based on preliminary unaudited internal management accounts, the estimated total financial impact of the COVID-19 outbreak and aftermath of the Hong Kong public order events for the first two months of 2020 amounted to around HK$1.3 billion on net profit of the Group’s recurrent businesses,” MTR said in a recent statement. “The impact of the COVID-19 outbreak on our businesses is likely to continue for some time, but the precise timing and scale of the impact is difficult to predict and will depend on the development of the situation.”
 
Another example is Amtrak, which has announced to suspend its flagship Acela non-stop service between Washington, D.C. and New York until May 26. According to Fox Business, the Acela is one of Amtrak’s best-selling tickets – a roundtrip between Washington D.C. and New York costs US$260, with customers taking more than 3.4 million Acela trips generating $606 million in ticket revenue in 2018.
 
Bus operators are not spared of the economic pains of the coronavirus, either. Charter buses in Hokkaido, Japan, for example, have canceled about 1,700 services between January and March due to a drastic decline in tourists, especially those from China, losing about 110 million yen, Japan Times reported, citing the Hokkaido Bus Association.
 
As for the warehousing, trucking and logistics industries, operators are also feeling the coronavirus’s impact. The Port of Long Beach, for example, estimates that containerized cargo in February is down 9 percent compared to the same time last year, according to Heavy Duty Trucking.
 
“This year, we expect to see 60 canceled sailings in the first quarter, and this is due to the additional manufacturing impacts caused by measures in China to prevent the spread of COVID-19,” the publication quotes a Long Beach spokesperson as saying.


Product Adopted:
Transportation


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