PPE controls drive China air rates even higher

NEWSFLASH: China lockdowns and supply chain latest

Mar 15, 2022 | , ,

Earlier today authorities in Langfang, which borders Beijing and Dongguan in the southern province of Guangdong imposed immediate seven-day lockdowns, joining Shenzhen, which started a seven day lockdown on Sunday, while the entire province of Jilin has been placed in complete lockdown and Hong Kong restrictions are continuing, as China’s COVID cases jump.

COVID cases doubled in the past 24 hours across the nation with attention turning to Shanghai, where Shanghai Pudong (PVG) Airport has been closed to inbound passenger flights and 106 diverted to 13 other cities, which will continue for six weeks, in a bid to stop the spread of COVID cases.

Shenzhen announced new COVID restrictions on Sunday, with a lockdown for the next seven days and non-essential workers staying at home. Adults must undergo three PCR tests in the coming days, and buses and subway trains are being halted. 

Our network office in Shenzhen will be closed this week, with staff working from home.

Foxconn, which manufactures iPhones for Apple, stopped its operations in Shenzhen on Monday, saying the date of resumption would "be advised by the local government".

Toyota, shut its factory in in Jilin province, but did not give a timeline for when business would resume and Volkswagen shuttered operations in Changchun and hoped to reopen its factory on Thursday.

Local governments are making special measurements and arrangements, so that imports and exports are not inhibited. The airport is operating normally, though with reduced staffing levels and flights are being cancelled or redirected to other airports.

Customs and trucking services are operating normally although there are restrictions on where they can travel due to the movement of drivers, and while we have not yet been advised of any official limitations to Yantian Port, the offices of carriers in Yantian are closed and low operating efficiency is expected.

Until now, shipping lines in Hong Kong have largely been operating as usual, but the suspension of flights from Australia, Canada, France, India, Pakistan, the Philippines, Nepal, the USA and UK will be extended until the 20th April.

Hong Kong Air Cargo Terminal is operating under increased pressure, due to a reduced workforce of about 30%, while trucking services to Hong Kong via the Shenzhen border have been suspended and the alternative of using feeder vessels to Hong Kong incurring cost and transit time. 

China regional round-up

Guangdong - There are some backlogs and delays at the airport.

Nanjing - Nucleic acid test are required to enter. Otherwise situation is largely normal.

Ningbo - Normal operations for transport, offices and factories.

Qingdao - Air and ocean are operating as normal, but there is limited capacity at the port terminal, due to restricted worker numbers. 

Shanghai - High-risk areas are in lockdown, but there is no complete lockdown of the city. Air cargo and charter flights are operating, but the decisions to close Shanghai Pudong airport to inbound passenger flights will reduce capacity and put pressure on rates. Trucking services and ocean are operating.

Xiamen - Normal operations for transport, offices and factories

Some areas including Hangzhou, Wenzhou, Jiaxing have local measures in place, with factories and community closures based on local conditions.

Yantai, Weihai and Zibo have been locked down, which means trucking services cannot be provided to these cities and also means some drivers may not be happy to go to Qingdao.

Despite the challenging situation in many regions, we work closely with our network partners, carriers and own offices across China, to monitor the situation and find solutions for our customers, including time-sensitive shipments.

The situation continues to unravel daily and we will keep you advised as new announcements are made and market intel is received from our colleagues in China. It is expected further lockdowns will be applied and stay at home orders given to workers over coming days. We are monitoring closely and will advise if shipping lines, airlines or inland transport become affected and schedules are delayed.

We maintain long-term contracts with airlines, carriers and shipping lines that secure space and rates, to provide the best alternatives and options, whatever the situation.

coronavirus4

China’s continued zero-Covid challenge for supply chains

Jan 27, 2022 | , , , ,

The lockdowns and restrictions that China’s zero-Covid strategy risk, may create greater disruption than earlier waves of the pandemic, threatening already stretched global supply chains.

Beijing’s strict zero-Covid policy has curbed local outbreaks with mass testing, snap lockdowns, vigilant surveillance and extensive quarantines, but new variants such as Omicron have seen outbreaks intensify since the autumn.

China is determined to prevent any further Omicron outbreaks, especially as it prepares to host the Winter Olympics next month. It has recently imposed restrictions to maintain its zero-Covid target, with a lockdown in the central city of Xi’an, mandatory testing in Tianjin and parts of Zhongshan, Zhuhai and manufacturing hubs close to Hong Kong. And these are just the incidents that are known and get reported. There will undoubtedly be greater influence and impact, from the invisible actions taken.

Meanwhile restrictions have been eased in Ningbo, home to the world’s third largest container port, which has been in partial lockdown for most of the opening days of 2022, making entry and exit far easier for truck drivers heading to the port’s five container terminals.

Chinese ports are being impacted by regional lockdowns, with the situation varying widely from port to port and carriers changing vessel rotations at short notice, to avoid badly impacted gateways. This evolving situation raises the potential of even further disturbance, to already delayed shipping line schedules, from the main China base ports.

The situation may be exacerbated in the coming weeks, as China enters the build-up to many seasonal factory closures during Chinese New Year and Ningbo is still clearing backlogs, with many shipments having to be re-routed to Shanghai, to meet mother vessels.

Hapag-Lloyd is omitting Ningbo on two of its Asia-Mediterranean services and reinstating the Shanghai call, even though Shanghai is already severely congested, with most vessels already delayed by around one week. Very early, on their voyages into Europe.

Supply chains can usually cope with short-term lockdowns, but added shutdowns over a few weeks cause significant problems and with Covid, the lunar new year holiday and the Olympics all coming together, risks are multiplied and magnified.

After the initial virus outbreak spread from Wuhan over the lunar new year in 2020, the Chinese government blocked transport, preventing migrant workers who had travelled over the holiday period from returning to their jobs and factories shut for several weeks.

The latest restrictions have already impacted multinational organisations, with reports of Volkswagen and Toyota shutting their Tianjin plants last week and Xi’an chipmaker Samsung unable to get staff to work because of the lockdown.

And infections may spread further after Beijing reported its first locally transmitted case of Omicron, just weeks before the opening of the Winter Olympics in the capital.

Analysts fear that if infections spread, manufacturers would be as badly hit as they were two years ago, with few companies having their supply chains outside China, because these are strategic issues, which take a lot of time to stabilise.

Rather than moving production entirely out of China, some companies are trying to build second suppliers in China, while seeking alternative sources for components, but few of these initiatives will have progressed, as geographic diversification is often complex to get in place.

Supply chains have never faced so many challenges and with the situation in China being so fluid and changing rapidly, it is more critical than ever that you have the support of dependable partners. 

Metro share the latest supply chain news and most important global developments, so that you are always informed about the best alternatives and options, to keep your supply chain optimised. 

For further information and to discuss your ongoing requirements please contact Elliot Carlile,  or your usual Metro account manager to discuss alternative routes to market and manufacturing facilities.

Ningbo

COVID outbreak impacts Ningbo port

Jan 13, 2022 | , ,

The suspension of trucking services in several parts of China’s Zhejiang province, followed a COVID outbreak just over a week ago and has slowed the movement of cargo through one of China’s biggest and most important ports, Ningbo.

Strict controls were imposed on lorries moving goods to or from the Beilun district in Ningbo after the discovery of several cases of COVID in the area.

This suspension, along with restrictions on truckers in some areas in and around Zhejiang, halted operations at some yards and warehouses at Ningbo port.

The curbs began last week after the city reported an outbreak of COVID which led to the closure of container freight stations and factories in the Beilun district near to the port, raising fears that importers would be unable to stock up their inventories, forcing them to look for alternative shipping or products, which may feed into higher costs for the consumer.

Ningbo is one of the world’s top container gateways and a crucial part of the global supply chains that connects importers to factories in East China. The port was partly shut for weeks last August after a COVID outbreak, causing a slowdown in exports, disruptions and congestion across supply lines.

Container loading and discharge operations at Ningbo port have been operating normally, but the impact on trucking and access to the port has been severe, making it extremely difficult to bring containers in or out, adding to concerns that shipping lines may decide to omit Ningbo.

With just a few weeks until Chinese New Year many shippers have been diverting consignments to alternative ports, particularly Shanghai rather than risk long landside delays at Ningbo.

Yesterday the trade press were reporting that a major complication is the lack of trucking permits for commercial vehicles to enter the Beilun district, with just 6,000 permits released for the 20,000 trucks in the area and truckers with permits must take two nucleic acid tests in three days and are required not to leave their vehicles while in the marine terminal. In a customer-advisory, Maersk said that just 10% of trucking capacity is operating in the Ningbo area.

In a fast-moving situation, our network partners in Ningbo have confirmed that the port and local trucking has resumed normal operations and they expect that any backlog will be cleared quickly.

Elsewhere, nucleic acid testing for drivers are creating delays for local trucking and transport in the Shenzhen and Tianjin areas, but the cities are not closed and port terminals are operating normally.

Metro are operating our own container vessels within our group of companies from Ningbo and Shanghai directly to the UK for discharge and reloading. We have vessels loading this week at both ports and have not experienced any impact with departures operating on time against our schedules as we use alternative terminals. Once they have left China they do not stop at any further ports en route and we can achieve the fastest available transit into the UK for our customers. 

For further information please contact Emma Hulbert who can discuss your specific requirements and share detail of the programme which will be running continually throughout 2022. A very exciting and unique platform available through Metro.

Supply chains have never faced so many challenges and with local conditions changing rapidly it is critical that you have the support of dependable partners. 

Metro will always share the latest news and most important developments, providing you with the best alternatives and options, to keep your supply chain optimised. 

For further information and to discuss your ongoing requirements please contact Elliot Carlile.

businessman stressed

2021; a year of supply chain challenges

Dec 21, 2021 | , , , , , , , ,

All around the world, companies have been impacted by supply chain challenges in 2021. With the pandemic’s disruption exacerbated by ‘Black Swan events', from Brexit, to the Suez Canal blockage, we have been working tirelessly to help our customers overcome these challenges and share critical information, so that they are always informed of what lies ahead.

Ensuring the right product is available for delivery, to the right customer, at the right time, in the right quantity and in the right condition becomes increasingly difficult when supply chains are pressured and unforeseen events impact operations.

To keep our customers and followers informed during 2021 we have been approached for our opinions regularly by the trade and national press, contributed to countless articles and shared breaking supply chain news, guides and insights, including:

  • 40 supply chain bulletins, to a combined audience of 32,000
  • 200 news updates on our web site attracting >100K page views
  • 1000+ social media posts, reaching over a quarter of a million users

Our first bulletin of 2021 highlighted early Brexit-related issues and outlined the rates, vessel space and equipment availability challenges that lay ahead.

A few bulletins in and we were considering the supply chain impact of the UK’s vaccine programme and, in preparation for the anticipated volume increases, were adding new personnel in key operational departments.

US port operations, particularly on the West Coast began to buckle under relentless volumes in early March, while European, North American and UK ports were anticipating a lull after the Evergreen EverGiven blocked the Suez Canal for six days, from the 23rd March. 

Lockdowns continued to ripple across Asia from April and container equipment shortages really began to bite, exacerbated by the ‘Suez Effect’, driving desperate shippers to move urgent cargo to air freight, with massive rate increases impacting many trade lanes and Metro’s Sea/Air services proving very popular with increasing numbers of smarter shippers.

May; and the same week we’re urging shippers to start planning their Christmas shipping schedules, the key Chinese port of Yantian stops accepting containers, after a coronavirus outbreak in the port area. Within weeks and the impact of the port’s closure has spread way beyond southern China, with carriers recording their worst ever transit times and rates at historic highs - 1,000% higher than 2020!

News of the heavy goods vehicle (HGV) driver shortage made mainstream news in June and Yantian finally opened, though Ningbo was to close just weeks later, after a single port worker tested positive for COVID-19, contributing to further sea freight rates increases, pushing increasing quantities of ‘distressed’ ocean cargo to air freight.

Throughout the year, while air freight has been uncertain, it has proven stable in comparison to shipping, with airlines being reactive and agile, switching on flights quickly to meet demand, where they have perceived a reasonable return on the investment and we have been ready to add charter capacity, to ensure that our customers’ expectations are met and delivery deadlines achieved.

Into the 3rd quarter and vessel space and the container equipment crunch continues, with market demand exceeding supply and rates skyrocketing. HGV drivers are considering strikes for better conditions, while demand for haulage is more than twice the 2019 level and 70% of hauliers are concerned about EU border checks due to come into force at the beginning of next year.

Metro’s technology team, meanwhile, have been integrating HMRC’s Customs Declaration Service (CDS), which will serve as the UK’s single customs platform, with our market-leading MVT supply chain platform and the CuDoS system, which automates and submits customs declarations in line with HMRC and EU regimes.

Our team also supported the development and adoption of emerging technology, across the shipping industry, by participating in the successful testing of new e-Bill of Lading (eFBL) standards, with FIATA , the trade association for 40,000 freight forwarding and logistics firms in 150 countries.

The final quarter of 2021 and the HGV driver shortage is intensified by further losses to the retail sector, factories in China are forced to close, due to power shortages, container carrier reliability drops to all-time lows, with ports subsequently omitted, to try and restore schedules.

Passenger airlines finally begin to convert and reduce the number of aircraft operated in ‘preighter’ configurations and return to flying scheduled passenger services on European, transatlantic and long-haul routes. 

As the year draws to a close, experts warn that the UK may run out of warehouse space, many shippers are still not ready for full UK border controls, manufacturing costs reach a three decade high, Omicron makes its debut and we share some Critical Christmas considerations.

This year we have also welcomed 60 new colleagues, to our Birmingham HQ and expanded our operations and platforms significantly, to ensure we deliver continued excellence, proactive communication and essential planning to customers. It’s what we do, to ensure we remain at the forefront of the industry, leading the evolution of freight and the dynamic solutions that benefit your supply chains.

However this year ends and whatever next year brings, you can rest assured that we will be available and ready to keep your supply chain running. Let’s keep talking and evolving as partners in an unpredictable environment and world. You are in safe hands!

Thank you for your support, Merry Christmas and Happy New Year.

Category: China

China | Coronavirus | Sea | Supply Chain

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