Gov. Brian Kemp voiced concerns Thursday about the impact coronavirus might have on Georgia's port traffic if the outbreak starts to significantly disrupt international trade and the flow of goods.
Georgia's ports "continue to fire on all cylinders," but the COVID-19 virus raises some issues, Kemp said at the South Metro Development Outlook conference at the Georgia International Convention Center.
“I’m concerned, and there’s not a whole lot we can do about it,” he said. “It’s shut China down in many ways. I think that will affect our port in the short term.”
The Port of Savannah is a gateway for commerce with China.
Almost 75,000 people in China have been sickened in the outbreak that started in that country, in the city of Wuhan. More than 2,000 have died worldwide.
The spread of the virus triggered Chinese government lockdowns that have prevented tens of millions of people from working, prompting the closure of thousands of plants. How many are still closed isn't clear but reports from China indicate some plants are re-opening. Even those are often operating with depleted staffs.
When factories stop making products used to manufacture other goods, that can affect the supply chain. "The coronavirus likely will disrupt supply chains for goods that are produced in part or whole coming out of China," said Kennesaw State University economist Roger Tutterow, speaking at the same event.
Decreases in production in China inevitably means problems for American companies, said Ruomeng Cui, a professor at Emory's Goizueta School of Business.
Looking back at an outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003, “it took the manufacturing industry one quarter to return back to normal,” Cui said in an email. “It took the service industry two quarters to return back to normal.”
Among products affected are consumer goods from Nintendo and Apple, as well as auto parts and toys. “A large percentage of Amazon products are made in China,” she said.
The Kia auto assembly plant in West Point and other factories around the state depend on components from Asia.
The less inventory that a company keeps in stock, the greater its current vulnerability, Cui said.
Experts say the pipeline from China’s factories to Georgia is six to eight weeks long.
While Georgia's ports handle cargo from various regions of the world and aren't as dependent on Asia as some West Coast ports are, China is still the fourth-largest market for Georgia exports. The country is the top source of imports, according to the state Department of Economic Development.
The Trump administration's trade battles with China last year caused the number of container loads shipped from Georgia to that country to drop 14% in the first nine months of last year. Imports from China dipped 1%, according to the Georgia Ports Authority.
Coronavirus is also affecting airlines and air freight. The International Air Transport Association said it expects passenger demand could decline 13% for the year for airlines in the Asia-Pacific region, mostly affecting Chinese carriers. And analysts say air cargo faces challenges from slowing economic growth due to the virus.