We would like to share our latest update on the general situation and the current status of ACS operations in China.
There has been further improvement in the situation over this week with most of the China provinces gradually resuming work. PRC Government has decided to promote the resumption of production across the country, although some provinces are taking a cautious approach with only a reduced number of personnel allowed on site. A lot of factories are also playing it safe for a little longer, rather than risk infection and a further long period of quarantine.
Our latest survey indicates that around 80% of factories are now open and are gradually increasing production. Only 29% of those surveyed had responded that full production had been achieved, and the results varied significantly by region. In Jiangsu province 79% of Nanjing suppliers were at full production, whereas in Guangdong the figure was 48% in Guangzhou, and 38% in Shenzhen. in Fujian both Xiamen and Fuzhou were among the lowest with only 13% reporting full production.
Feedback from the factories, is that many report worker attendances increasing steadily, but that other supply chain challenges still exist. These include upstream supply delays as well as road transportation shortages and increased driver and vehicle regulations. Thus, we expect that full production will still fall significantly short of 100% over the coming week.
Reports from all ACS origins show an improvement in local transportation and that between 60% and 80% of normal trucking services have been restored. Exceptions are in Hubei, Zhejiang, Anhui, Henan and Hunan provinces, but the general message is that the sector is back up and running and that it is now the shortage of cargo that is delaying the recovery further.
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.
ACS is fully operational and has also extended the work from home policy. In some origins it remains a regulation to work with reduced personnel on-site, including Beijing, Hangzhou, Ningbo, Shanghai, Shenzhen and Xiamen.
Ports and Terminals
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.
Some ports are experiencing problems with stranded inbound reefer containers causing port terminal yard density to reach critical levels. This is a problem at Shanghai, Ningbo and Xiamen, where the congestion is causing some concern for export cargo. 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 17 major sailings cancelled between the 26th February and the 31st March, and a further 4 sailings cancelled in April. The situation is changing by the day, with carriers making late decisions to cancel vessels. It would be wise for customers shipping from China to budget for 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
As mentioned in our earlier updates, 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. Around 35% of the vessel capacity running through the transhipment hubs to UK main ports has been cancelled, and this is likely to impact many customers. Contingency plans are in place, but we are advising customers to budget for an extra 7 to 10 days in transit from these origins.
The Indian sub-continent has seen dwindling stock of raw materials which originate in China. For example, the ISC imports 20% of its cotton from China. Production may well be affected in other regions.
ACS works with all the major shipping alliances covering both South East Asia and the Indian sub-continent and we are confident that contingency arrangements will operate smoothly.
Volumes are starting to increase slowly, but many scheduled passenger flights are still not flying and are not planned to resume until mid-March or early April; freighters are still grounded.
This reduced capacity and increasing demand will lead to a rate increase – we expect to see evidence of this in week 10.
The increasing severity of the outbreak of the virus in Korea has yet to affect the Ecoair shipments but we are watching the sea transhipment hubs and air carrier availability at Incheon.
*ACS China Operations, 26th February 2020*