Coronavirus: The supply chain impact

January 30, 2020 12:52 pm

Chinese authorities have already extended the lunar new year holiday until 2 February, with workers in Shanghai and Ningbo being told to stay home until 10 February.

British Airways has suspended direct flights from the UK, while United Airlines and Air Canada are amongst the other airlines that have announced plans to reduce flight numbers.

Cathay Pacific is to reduce the capacity of passenger flights to and from China by 50% or more from 30 January to the end of March, but has confirmed that freighter operations will continue as scheduled.

While freighter capacity is welcome, the reduction in belly-hold air cargo capacity is a big issue and significantly reduces volume, at a time when many shippers will be seeking rapid transit.

Be reassured, we have not experienced any significant delays in shipments to or from China so far, but we have to expect the situation to change, if the virus continues unabated.

We would advise shippers to expect more blanked sailings and the likelihood of increased freight rates, if factory closures result in significant backlogs of purchase orders and unshipped cargo.

Ocean freight rates stay elevated and capacity remains tight in the short-term following a standard Chinese New Year, as the lines add the backlog of shipments that didn’t get moved before the holiday to their normal volumes, but should the factory shutdown get extended for a further week, the backlog would double, pushing freight rates up and resulting delays and rollovers.

Third-party operations like truckers, port operations and customs authorities will also be adversely affected, adding to any delays.

NOTE: There has been NO significant impact to vessel schedules so far and air freight is still operating. If you have shipments pending in China, we would urge you to contact us without delay, so we can explore the best options to repatriate your cargo.

This is an evolving situation that we are monitoring closely and will update our advice, as developments occur. Visit our site or follow our social feeds to stay up to date.

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