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5th March 2020

COVID-19 Updates

We would like to share our latest update on the general situation and the current status of ACS operations in Asia and Europe

General Status in China

The situation continues to improve slowly as the Chinese government promotes the resumption of production and support the logistics industry; and fewer cities / provinces are being so cautious. But general mobility is still restricted and quarantine restrictions remain in place.

Production in China

Our surveys indicate that of the factories that have reopened, 35% are now operating at full capacity. The number of open factories vary by region; more factories in Jiangsu and Guangdong provinces have re-opened compared to Sichuan and Fujian provinces

Local Transportation in China

Reports from all ACS origins (except for Hubei Province) show that the domestic trucking situation is improving as truckers return to work. Transport availability varies from city to city, with an estimated 80% of normal capacity at Shenzhen, Chengdu, Hangzhou and Nanjing and 70% at Ningbo, Shanghai and Xiamen. Some origins are struggling to recover, with Fuzhou, Guangzhou, Beijing, and Chongqing at around 50% of normal capacity.

Shipping Lines and Logistic providers

Most shipping lines are still following local government guidelines and only gradually increasing on-site working. Most indicate that they will extend the work from home policy until the 10th March and might extend further.

ACS is fully operational and working in compliance with PRC Government regulations and local Government guidelines. We will continue with a mix of on-site and remote working until further notice in China. This policy will be rolled out to other affected countries as part of our global Business Continuity Plan.

Ports and Terminals in China

All ports and terminals (except Wuhan) continue to work normally, and empty pick up and laden return services are working smoothly from all terminals and off dock facilities.

There are some concerns over empty container availability with some carriers already running short in some areas. Whilst not a major concern at present, this problem may grow with a combination of fewer containers returning to China and a rapid increase in export volumes. ACS is working with carriers to minimise the impact of this on customers.

Vessels and Cancelled Sailings

A further 7 sailings from China have been cancelled over the last week, but these are more in anticipation of the usual leaner times in March and April, when volumes from Asia to North Europe historically tend to be lighter.

The current situation on the ground is somewhat different, with a surge of bookings taking some of the carriers by surprise. We are seeing cases where the sudden demand is exceeding the carrier’s capacity because of all the cancelled sailings. We are working closely with customers for the best contingency plans over this difficult period.

UK Exports

The impact of the void sailings from China in February is now beginning to affect our UK export customers. There are eleven major sailings not leaving the UK in the next 10 days and this is causing space shortages for the carriers, who are using the opportunity to increase freight rates and apply surcharges on exports.

Equipment Shortages

The cancelled sailings will also affect the carriers’ ability to reposition empty containers back to Asia, as well as impacting availability in Europe. Currently there is equipment available in China, but shortages are anticipated at other major ports. Reports show that at the moment there is a deficit of containers in North America and Europe – the opposite of the normal situation.

Thus, there may well be equipment shortages at some origins in circa six to eight weeks, and we anticipate that we might need to offer alternative carriers / transits / rates to customers if this equipment issue combined with further cancelled vessels should escalate into a bigger problem in the weeks and months ahead.

Equipment imbalances and empty repositioning will be expensive for carriers and they may look to implement surcharges as a result.

Trains from China

Whilst the train service from Wuhan is suspended, we would like to make clients aware that we are still operating services from most China origins into Warsaw, with transfer onto an ACS dedicated overland service from Poland to the UK. Rates and transit times are available on request.

Air Freight

There has been little change to the situation in China in the past few days. Volumes remain low but rates are increasing. More European carriers such as SAS are extending their passenger flight suspensions through to mid April.

Inter-Asian flights are also affected.

Some freighter services have restarted from south China but there is still little volume and rates are stable.

Impact on Other Markets

South East Asia, India and Bangladesh

The cancelled sailings from China are now having an impact on South East Asia and Indian sub-continent regions, which tranship onto these vessels mainly at Singapore, Tanjung Pelepas and Colombo. Around 35% of the vessel capacity running through the transhipment hubs to UK main ports has been cancelled over February and March, and with China now ramping up production over the last week we expect to see the carriers filling vessels from China and this is likely to cause some congestion and space issues at the transhipment hubs over the coming weeks. Our advice remains that clients should budget for an extra 7 to 10 days transit from these origins.

In general, daily life, production and transport have not been too badly affected in these origins.

Air freight capacity and rates are stable from most other origins, excepting Korea.

Korea

There has been a sharp increase in confirmed cases of the virus in Korea, with Daegu the worst affected area; however, we have not yet had reports of major disruption to production or vessel sailings.

Korean Air Freight

With the increase of the virus in Korea, we are seeing the cancellation of some passenger flights. Freighters are still working, so for the moment, customers using the ACS Eco Air service will be unaffected; however, should the number of passenger flight cancellations increase, cargo for these flights may look to fly with the freighters which may well lead to space issues and rate increases.

Italy

Currently we are not seeing any impact on our services to/from Italy. However, distribution to/from the following areas is prohibited by the Italian government:

In the Lombardy Region, Lodi Province:

a) Bertonico

b) Casalpusterlengo

c) Castelgerundo

d) Castiglione D’Adda

e) Codogno

f) Fombio

g) Maleo

h) San Fiorano

i) Somaglia

j) Terranova dei Passerini

In the Veneto Region:

a) Vò – a commune in Padua Province, approx. 50 km west of Venice.

We are monitoring the situation daily, and should the need arise to make changes to our current set-up these can be implemented with immediate effect.

UK

Confirmed cases of the virus are rising in the UK and the government is working on measures to slow its spread. ACS will comply with all government measures as and when they are announced. We have implemented our CORE Command Team (Central Operating Response to an Event), part of our Business Continuity Plan, with members who are responsible for all or our operations and sites.

Our IAP (Immediate Action Plan) identifies critical activities and employees, and the inputs required to maintain them. The IAP is kept under constant review and we will update as the situation develops.

 

*5th March 2020*

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