Gene Seroka, executive director of the Port of Los Angeles, told CNBC on Tuesday that based on a sharp slowdown in shipping he believes the economic drag from the new coronavirus will turn out to be larger than SARS.
Seroka was working in Shanghai for a Singapore-based container and shipping company, called American President Lines, during the outbreak nearly two decades ago of severe acute respiratory syndrome, which also originated in China.
“At that time, we were all grounded. We weren’t moving around domestically nor internationally. This appears to be much worse because of the number of folks who were infected and the lack of productivity that is taking place through the supply chain, starting with the manufacturing base,” Seroka said in a “Squawk Box” interview.
The SARS outbreak saw nearly 8,100 cases globally, with 774 deaths, meaning nearly 1 in 10 people who were infected died. While estimates vary, economists believe SARS cost the global economy about $40 billion.
Flash forward to 2020, there are more than 80,000 worldwide coronavirus cases and at least 2,704 deaths. While the numbers are much larger, the coronavirus has not been nearly as deadly. Economists are expecting a far greater impact on the global economy from the coronavirus, largely because China’s economy has grown to be the second biggest behind the U.S. since its sixth-place ranking during SARS.
Seroka said the first priority in getting people back to work in China, even as corornavirus cases continue to climb there and start to spread wider in Asia and Europe, needs to be safety. “We need to curb the illness first and get people well.”
The spike in coronavirus cases beyond China, specifically in South Korea and in Italy, sparked concerns Monday about a prolonged global economic slowdown due to the outbreak. The Dow Jones Industrial Average, which bounced at Tuesday’s open, plunged more than 1,000 points or 3.5%, on Monday. The market losses Monday were widespread around the world, with global stocks losing more than $1.7 trillion of value in a single day.
Seroka said: “The next most concerning information was yesterday with South Korea. Busan [Port] is a big hub for us as well. … Any further outbreak is going to concerning for our industry.”
The Port of Los Angeles, which bills itself as the busiest seaport in the Western Hemisphere, has seen a 25% decline in shipments in February, with the entire first quarter tracking for 15% less volume.
The new coronavirus, called COVID-19 — which was discovered on Dec. 31 in the city of Wuhan, China, in Hubei province — started to get widely publicized late last month. The vast majority of cases and deaths are still in China