We would like to share our latest update on the general situation and the current status of operations in China.
There has been an improvement in the situation over this week with most of the China provinces gradually resuming work. The level of shipments has been low, which is due to a combination of labour shortages in the factories, combined with limited trucking resources over this week. Most origins are improving now, with more workers finishing their 14-day quarantine period, and we are seeing an increasing number of shipments being booked for the coming weeks.
Our latest survey on factory production over a selection of ACS customers revealed that around 15% of orders have been shipped as planned over the last week and that 48% is now shipping late but booked to ship via sea in the next 14 days. The indications are that it will be a gradual build up in volumes in the weeks ahead, and that it could be some weeks before things return to normal with production.
Local transportation remains a challenge in some areas of China. It is estimated that around 50%-60% of services are available in Shanghai and Ningbo, whereas the figure is probably a little higher in the southern parts of China. We are working closely with shippers that need help with transport, in some cases suggesting changes to the routing of shipments via more local ports or terminals.
Over the last week, most shipping lines confirmed that they would follow local government guidelines and would continue to ask staff to work from home. The date for expected return to normal work has now moved to the 3rd March for most of the Shipping Lines. ACS is fully operational but is also following the local government guidelines and has also extended its remote working policy for at least one more week.
Ports and Terminals
All ports and terminal (except Wuhan) are working normally. However, the extended holidays and lack of trucking arrangements over the last several weeks have caused a backlog of import cargo stranded at the ports and terminals in China. This is not only delaying some inbound materials and components for manufacturing but is also now causing port congestion that is affecting some exports. We will notify any clients affected by this problem on a case by case basis.
Vessels and Cancelled Sailings
On the Asia to North Europe trade there are 56 void sailings announced for the year to date. There are 13 major sailings cancelled between the 17th February and 2nd March, and now there are also another 14 sailings cancelled in March and April.
Volumes are still very low in China, and carriers are making late decisions to cancel vessels. This is not causing any space issues at present, but it will certainly limit the choice of available sailings for some customers, who might also suddenly be affected by a very late decision to cancel a vessel. We would suggest that customers budget for the possibility of an extra 7 days in transit during this uncertain period. The carriers remain keen to restore capacity as soon as the volumes recover.
Impact on Other Origins
The cancelled sailings from China are beginning to impact on South East Asia and Indian sub-continent regions, which tranship onto these vessels mainly at Singapore, Tanjung Pelepas and Colombo. Looking specifically at ships that are destined for UK main port arrival, over February and March, Singapore has 13 out of 43 vessels cancelled and Tanjung Pelepas has 17 out of 44 vessels cancelled. This will have an impact on many customers and the missing vessels are likely to result in some transit times being 7 to 10 days longer than usual. ACS works with all the major shipping alliances covering both South East Asia and the Indian sub-continent and will help customers with the best contingency plans from the areas affected.
There is again not much change to the situation reported at the beginning of the week. There is little cargo waiting to fly and whilst some freighters are moving, scheduled flights are still suspended.
BA and Finnair have both announced that services are suspended until the end of March. We do not expect much change in the next week.