Coronavirus Update - March 2020

18 March 2020

With acknowledgement to our peak industry body FTA (Freight & Trade Alliance), we share the following update regarding the impact of the Coronavirus on supply chain operations:

China

China Ports & Harbours Association confirmed on 16 March that the ports in China have now returned to normal operation, and the storage issues have greatly improved.

As also confirmed by Hapag-Lloyd, the ports are aiming to have 80% of stacked containers shipped out in the next 4-8 weeks.

Vessel sailing schedules are returning to normal, some shipping lines such as CMA CGM have confirmed this to be the case from mid-March. Although there has been no official announcement, other major shipping lines including OOCL and COSCO expect to be back to normal from 20 March.

Local truck transport operation is stable, especially within South and East China (Guangdong, Zhejiang, Jiangsu Province etc). Interstate truck transport are still facing some travel restrictions, which has most shipping lines and forwarders using trains to avoid this issue. There is no indication as to when the restriction will be lifted at this stage.

Europe

Although many European sites and offices are continuing to operate, delays in shipping are being experienced due to increased health and safety measures at the borders.

The travel restriction between 26 European countries and the US has no significant impact on transatlantic cargo movements, at least for the time being. We may see a severe drop in available capacity for air cargo due to the trade lane being largely dominated by passenger aircraft.

As advised in our previous update, with regards to the lockdown in Italy, please note that the restrictions do not extend to the transportation of goods or containers in any Italian region via sea, air or road. If your Italian suppliers are still open and manufacturing as per usual, then your shipments should be unaffected.

Air Freight

An unprecedented, indefinite level-four travel ban is now in place globally. This will see a significant decrease in air cargo capacity as airlines wind back their international services, and belly space for cargo along with it. While cargo charter flights will be available, they will likely incur substantially more costs that the normal air freight tariffs.

13 March 2020

FJT Logistics remains in close contact with our branch in Italy, who have provided the following update on the impact of the Coronavirus and the national lockdown.

One terminal within the Port of Genoa has closed due to concerns of the Union with the current level of sanitation. We understand that cleaning and sanitising is being arranged with the hope to reopen, although the advice from the terminal is that the recommencement of operations is yet to be confirmed.

At this stage all other ports are still operational, however this is an extremely volatile situation and we anticipate that other terminals and/or ports may close at some point.

FJT will continue to provide updates as we receive them, however should you have any queries or concerns please do not hesitate to reach out to your local FJT office.

10 March 2020

On March 8, Italian authorities ordered a lock down across the whole of Italy in an attempt to control the outbreak of the Coronavirus.

Our Italian office has advised that the current situation (which may change) is that production, transport and port operations are continuing, albeit with individual preventative requirements. For example, truck drivers must remain in their truck while picking up cargo, and are required to wear masks and disposable gloves.

Further information from the Italian authorities advises that the restrictions do not affect those who must travel for “well-grounded” work related reasons, unless they are currently subjected to quarantine measures or have tested positive for COVID-19. Transporting goods is considered as a “well-grounded” work related reason for travelling, carriers may therefore enter and exit as well as move within the restricted areas, but only for delivery and/or collection purposes.

This is a volatile situation and we expect that advice will be subject to change over the coming days. We will continue to provide updates as we receive them, however, if you have any questions or concerns, please get in touch with your local FJT office.

4 March 2020

China's return to work

Measures are being taken to ensure that any factory/business that is re-opening has met all requirements for cleaning of their facility and equipment

Chinese government encouraging use of trains to carry containers rather than rely on trucks between cities and provinces

Most provinces have reduced their control restriction from level one to level two, this means other provinces’ workers, if healthy, are able to travel into most of the provinces

It is also understood that there are reasonable stocks of export goods in storage that should be able to enter the supply chain immediately as those places open back up

Productivity in the provinces

Most of the eastern provinces such as Zhejiang, JiangSu, Fujian, Guangdong, Shanghai, and Shangdong are back to work. However, due to travel restrictions, most of the manufacturers are still not operating normally at this stage due to staff shortages. Some of the provinces have started using charter flights to get workers back to work. Henan province has announced 16 March as their return to work date. Most nationally owned manufacturers are at 80% productivity and logistics companies back to running around 95% (not full productivity at this stage)

In Zhejiang – 99% of companies and manufacturers are back to work. However, the productivity is around 50%, expecting an increase to 80% by mid to late March

In Guangdong – 99% of companies and manufacturers are back to work. Productivity for many companies is around 50%, again expecting an increase to 80% by late March. The province is using high speed trains and charter flights to get workers back from inner Chinese provinces

The furniture industry in Guangdong province is now back to 80% productivity and the car parts industry in Shangdong province has been fully operational since 15 February under Government guide

The textile industry in Zhejiang province has returned to 80% productivity as at 29 February

In Jiangsu province, 78% of companies and factories are back to work, worker numbers are at approximately 6.25 million which is 76% of the normal requirement

Blank sailings and peak season surcharges

The Australian Peak Shippers Association (APSA), as the designated peak shipper, has noted a significant number of blank sailings impacting liner services agreements registered under Part X of the Competition and Consumer Act 2010. Given the unpredictability of this event and fluid nature of both the Coronavirus development and the associated response, APSA has accepted a waiver of the statutory provision for 30 days’ notice to be provided to shippers informing them of associated blank sailings, as required by section 10.41(2) of the Act.

It has also been reported that blank sailings for direct voyages have created a peak demand for continuing services, this being an outcome that was not anticipated for this time of year and before the Coronavirus outbreak. As a result of the change in supply and demand of shipping services, it is noted that some shipping lines have this month introduced a Peak Season Surcharge of up to USD$100 per container to all cargo moving from Australia (generally to all regions except USA and Europe).