We would like to share our latest update on the Covid-19 virus, which today reportedly affects 115 countries; and the current status of ACS operations in Asia and Europe.
General Status in China
The situation has improved further in the last week. The PRC Government continues to promote the return to work, although some factories remain cautious and are only slowly increasing staffing levels rather than risk having their premises quarantined in the event of workers being infected. There are still some local restrictions on the number of on-site personnel allowed in some provinces, but these restrictions are gradually being eased.
Production in China
According to our in-house survey of over 6000 shippers across the country, around 44% report that they are back to full production. The results still vary according by region with Nanjing in Jiangsu province having 91% at full production, and Guangzhou in Guangdong province at 76%. The figure is still less than 50% for most origins.
Local Transportation in China
Latest reports indicate that there has been a big improvement in most origins. Guangzhou, Hong Kong, Ningbo and Qingdao report that business has returned to normal, with Shenzhen at 90%, and Xiamen and Shanghai at 80%. Tianjin was still struggling with only around 60% of trucking restored.
Shipping Lines and Logistic providers
Most shipping lines are still following local government guidelines and only gradually increasing on-site working in the areas still subject to local regulations. The areas still affected are mainly Chongqing, Ningbo, Shanghai Shenzhen and Tianjin, where carriers are supporting operations with remote working.
ACS has resumed normal business operation in all locations except for Wuhan. This continues to be a mix of on-site personnel, and staff working with remote access.
We have also adopted off peak hours for some of our staff in Hong Kong, Qingdao, Shanghai, Shenzhen and Tianjin, in order to avoid the busy commuting hours.
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.
With local transport recovering, the volume of import containers being picked up is increasing and yard density in the major ports is improving. We are not currently seeing any port congestion problems.
Vessels and Cancelled Sailings
At the 11th March, there are only six more Asia to North Europe vessels cancelled this month, followed by five in April and three in May. This is what we would expect to see at this time of year as part of the carrier’s normal Vessel Maintenance Scheme (VMS) and is a positive sign that the carriers are resuming normal services.
There are 14 major vessels missing from arrivals in UK main ports over the next 14 days. The lack of ships is already causing significant problems for exporters, and carriers have used the opportunity to apply General Rate Increases and/or Peak Season Surcharges to Eastbound cargo destined for Asia.
Our reports continue to show that there is a deficit of containers in North America and Europe – the opposite of how things normally are at this time of year. With the shortage of vessels arriving, this problem looks set to become worse over the next month. It leaves the carriers facing operational difficulties and additional costs for dealing with the imbalance of equipment and is likely to result in shortages of containers at some ports in the coming months. It seems likely that some carriers might introduce surcharges to overcome this problem and to recover their costs.
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.
The situation in China is unstable. There have been more passenger flight cancellations because of the deteriorating situation in Europe. This has further affected capacity and quoted rates are increasing dramatically.
The number of bookings is growing, however there is still little cargo on hand, actually ready to fly, and it remains to be seen whether or not the booked cargo will materialise for transport.
The situation in Europe may mean that cargo will be delayed or transferred to sea freight.
South China still has capacity but today, China Southern cancelled its European freighter services with no notice. This reduces capacity further and will lead to rate increases, particularly as bookings grow as production levels rise.
Hong Kong Air Freight
Hong Kong has seen increased movements of high-tech goods. Capacity is now in demand and carriers are looking for cost recovery. As a result, rates are rising dramatically.
Impact on Other Markets
South East Asia and the Indian Sub-Continent
February saw the cancellation of 33 sailings from Asia to North Europe. The majority of these ships would have been calling at Singapore or Tanjung Pelepas, and these transhipment hubs have developed backlogs of cargo to clear. The situation is beginning to ease, but there are still another 14 void sailings to come over the next eight weeks, and it will take time for the situation to return to normal. Our advice remains to allow an extra 7 days in transit from these origins, to allow for the void sailings and the need for cargo to be sent on alternative vessels that might be slightly longer in transit.
ACS has contingency plans in place and will work with the customers affected.
At this point, air freight capacity and rates are stable from most other origins, except Korea, to Europe. We are watching Vietnam, Cambodia, Myanmar and Singapore as we believe that these origins will experience rate increases in the coming weeks.
But inter-Asian flights are also affected. – Most carriers have suspended flights from China into SE Asia, and ISC carriers have also cancelled flights into China till further notice.
Korea still appears to be stable for sea freight shipments, but we will continue to monitor the situation.
Korean Air Freight
The situation in Korea is still relatively stable at the moment; passenger flights have been cancelled but the freighters are still flying. All Middle Eastern/ European passenger carriers have now pulled out of flying in or out of Korea. This will impact the freighter capacity which again is seeing increased rates.
As has been widely reported, the general situation in Italy has worsened and the entire country is now “locked-down”.
Currently, the lock-down does not prevent the transport / movement of freight and businesses can still operate. Thus, our services are, for the moment, still running as normal.
However, it seems inevitable that departure delays and transit times alterations should be expected towards the end of the week and into next as the lock-down takes hold.
The lock-down may well also affect suppliers’ ability to travel to work and production levels themselves.
Distribution to/from the following areas is still prohibited by the Italian government:
In the Lombardy Region, Lodi Province:
And in the Veneto Region, Vò – a commune in Padua Province, approx. 50 km west of Venice
The majority of trailers moving to the UK from Turkey transit Italy. The current situation is that operations on the trains and ferries are functioning as normal with no problems.
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.
*ACS Operations, 11th March 2020*