17th February 2020
The World Health Organisation has officially named the Coronavirus epidemic COVID-19, and we will be using this term in our future communications.
The provinces across China are gradually resuming work. The requirements to obtain permission to work are similar across the country, requiring strict compliance with Safety and Hygiene regulations. Whilst most parties have obtained permission to resume, the impact on their business varies depending on the service provided.
Are generally approved to resume but rely heavily on labour. It is estimated that production might have only been 20% of capacity over the last week. This figure is increasing daily, although many workers are still observing the local quarantine regulations, and this will prevent production from returning to normal for at least several weeks.
With strict local regulations in place and drivers having to observe quarantine rules, it is estimated that less than 50% of transport capacity has been restored so far. The industry appears to be keeping up with the current low production volumes.
Shipping Lines and Logistic providers
As advised in previous communications, ACS has been operational since the 3rd February and continues to follow the advice from local government to restrict the movement of people as much as possible. We have a small number of our staff attending offices with the majority working remotely.
Shipping lines are now announcing that they will continue with remote working – in some cases not suggesting a return to normal working until at least the 2nd March.
Ports and Terminals
Except for Wuhan, all carriers are reporting that ports and terminals are working normally now.
Vessels and Cancelled Sailings
Volumes are very low in China, and in order to balance capacity with demand the carriers are cancelling more sailings at very short notice. This has not resulted in space shortages but might limit the options of carrier available for those customers that have cargo ready to ship. It would be wise to budget for an extra 7 days on transit times for contingency plans, or for cases where these very sudden decisions to cancel ships are made by the vessel operators without warning. This is normally a quiet time of year for shipping, and there are many ships unemployed at present. As China production recovers, the carriers can react quickly to any sudden increases in volumes, and they will be keen to reinstate capacity as quickly as possible.
Impact on Other Origins
Looking outside China, the current wave of cancelled sailings is going to cause issues for shippers in South East Asia and the Indian sub-continent in the weeks ahead. Many of these origins rely on connections to the China vessels at Singapore, Tanjung Pelepas and Colombo, and those ships are the same ones that are now cancelled. We are working with customers on identifying the expected volumes and making contingency plans for these other origins, as there will certainly be some space and transit time issues as a result of all the missing vessels. It would be wise for customers to review their commitments to suppliers from these other origins, and to budget for extra 7 to 10 days transit time over the coming weeks.
There is little change from the situation reported last week. The transportation issues discussed above mean that little cargo is available to fly, although there is capacity available.
We believe that it will probably week 9 before air freight volumes start to return.
Currently air rates are stable from China and HK.