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China freight – some semblance of normality returns

[ March 10, 2020   //   ]

Freight forwarders and shipping lines are reporting that freight services from China are slowly getting back to normal after the corona virus outbreak in the country. However, volumes remain depressed and services have been dislocated by the outbreak.

Davies Turner head of supply chain services, Tony Cole said: “For China rail, FCL space remains extremely tight in view of the fact we understand there remains no service ex-Wuhan and Yiwu and only 50% of the usual services are running from Zhengzhou. “

However, the forwarder’s Express China Rail consolidation service is ready to depart on 13 March as originally intended and Davies Turner is now planning cargo for our next consol departure on 20 March.

All Davies Turner’s regular ocean consol and FCL services have resumed from main China ports and are running as expected “and we are hearing far fewer instances of any trucking restrictions prohibiting collection of cargo”.

Cole added that market volumes are gradually increasing to an estimated 60-70% of the expected levels dependant on port of loading but it is apparent that the production at many factories is not yet back to normal output. This may be because not all factory workers have returned yet, delays in deliveries of  raw materials or possibly both.

However, said Cole: “We are confident the market will eventually bounce back and Davies Turner is in a good position to continue to offer our range of services to importers.”

Davies Turner’s Air Cargo (DTAC) arm reported that reduced passenger demand from mainland China had led to capacity cuts and freight was moving on a case by case basis rather than the usual pre-booked or block space agreement system. However, volumes are gradually increasing in line with industry reopening with, on 10 March, 46% of factories open, up from 33% at the beginning of March.

From Hong Kong consolidation and pre-booked space is being honoured but “anything outside of the pre-booked allocation is critical with bookings on a case by case basis”.

Other Asian markets are operating in a similar fashion to Hong Kong apart from South Korea which is more in line with China, DTAC reported.

DTAC is however more focused on exports to Asia and here there has been a significant impact on airline capacity, volumes and rates with no signs of recovery just yet.

Freight forwarder Kuehne and Nagel also reports that business in China is generally returning to normal. With the exception of Wuhan/Hubei Province, factories across the nation are resuming production, though with reduced manpower although quarantine rules are affecting both the trucking and general labour force. KN expects production to return to full capacity by the end of March.

Most Chinese ports are fully operational handling currently lower demand and the port of Wuhan is also gradually resuming operations.

However equipment shortages will remain for some time and there is severe congestion at Shanghai, Tianjin and Ningbo ports due to slow collection of incoming containers. This means that many import containers still cannot be accepted or moved to Chinese warehouses. There is also a shortage of reefer plugs at shipping yards.

KN adds that, until China returns to regular production volumes, carriers will continue to operate selective blank sailings until the end of March which in turn is delaying repositioning of equipment and resulting in container shortages in North America, Latin America and Europe.

Overall, trucking services in China continue to recover but require advance booking in West China.

Cross-border trucking to and from Hong Kong (remains normal and the China/Vietnam border at Pingxiang resumed operations on 17 February.

In Central Asia, the China/Kazakhstan border at Horgos remains closed until mid-March but trucking to Europe via the China/Russia route is continuing as normal.

Airports, airfreight truckings and customs clearance in China is gradually improving with only Wuhan airport remaining closed to commercial traffic.

South Korea has sthough een a reduction of more than 70% in passenger flights to and from Asia, and 20% fewer passenger flights to and from Europe and the Americas. Although freighters continue to operate, overall capacity is limited.

There is also pressure on capacity caused by limited passenger flights is in Japan and Vietnam.

However, adds KN, as the situation in China begins to stabilise, the effects of the virus on public health and the economy are increasingly being felt by other countries in Asia, Europe and the Americas.

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