CORONAVIRUS DISEASE 2019 (COVID-19) UPDATE
February 20, 2020
EVOLVING SITUATION IN CHINA
China companies and factories are gradually resuming work, but it varies across provinces. Hubei province remained locked down. Based on our initial assessment, organisations that have received approval from local authorities to reopen are currently operating at approximately 10 – 50% of their normal working capacity. The reduced staff strength is driven mainly by (i) the 14-day quarantine period imposed on all travellers returning from other provinces and (ii) workers still unable to return from other provinces. This resulted in an impact on both the trucking and factory labour force. Production levels may only stabilise by the end of February or early March.
As such, we see a soft demand for international freight movement currently, with no considerable impact on daily port operations (sea and air) in China. At this moment, we are unable to predict how the situation at the ports will evolve as factory production levels pick up and swing into full capacity
Trucking services across all cities remain limited because of the closure of selected highways and shortage of drivers – causing cargo deliveries to be under tight delivery constraints. However, we expect a gradual improvement over the next few weeks.
We are monitoring closely and adjusting our resources to support you and your organisation.
All key Chinese ports are operating, albeit with lower efficiency due to limited workforce. The ports of Shanghai, Tianjin and Ningbo remain congested due to yard density at critical levels and ongoing shortage of reefer plugs at the terminals of these ports. Loading and discharging operations slowed down due to lack of stevedores. Wuhan port remains closed until further notice.
Ocean carriers reacted to the situation with an additional 32 void sailings on top of the Lunar New Year blank sailings – removing a total capacity of 350,000 TEU per week. Coupled with the expected cargo rush once factories resume operations, shipping capacity will be at a severe shortage. This rapid mass cancellation of sailings from China will cause capacity shortage to backhaul shippers in the next 3-6 weeks depending on geography. As a result, freight rates are also expected to spike in response to the space shortages on both headhaul and backhaul voyages. The prolonged container turnaround time resulting from bottlenecks at main Chinese ports will adversely impact the availability of equipment within the network.
Ocean carriers are taking measures by announcing a Congestion Surcharge or Cost Recovery surcharges with immediate effect to cope with the current situation.
ASIA PACIFIC AIR LOGISTICS
All airports in China Mainland and Hong Kong (SAR, China) are operational except for Wuhan airport, which is closed to passenger flights and receives only relief missions.
Our Airfreight stations are operational to receive cargo and process export/import shipments with varying levels of delay.
Please note that in the given situation of extreme capacity tension, we, unfortunately, can no longer assure lead times at their applicable rates. To the extent available, we will offer market rates for purchased (charter) space and make sure we address your needs and requirements, ensuring business continuity where and as possible. Also, we are focusing on uplifts directly into the respective destination airports in China, which in the current situation has proved to be more reliable.
We encourage you to reach out to your respective Kuehne + Nagel Air Logistics contact person for the latest information about all flight cancellation news and any specific requirements regarding your airfreight shipments in/out of China.
ASIA PACIFIC ROAD LOGISTICS
The operation for cross-border trucking to/from Hong Kong (SAR, China) remains normal. Where there are direct shipment to China challenges, customers may consider sea/air mode to Hong Kong (SAR, China), followed by trucking services to inland destinations.
For cross-border trucking to ASEAN countries, China/Vietnam Border (Pingxiang border) had resumed operation from Feb 17, 2020. Restrictions on the number of truck entry/exit are also removed. Truck companies and drivers must continue to comply with local epidemic prevention and control requirements.
For cross-border trucking to Central Asia countries, the China/Kazakhstan border (Horgos border) remains closed until the end of February. For trucking to Europe, the route via China/Russia (Manchuria border) is feasible now.
KUEHNE + NAGEL SOLUTIONS
Kuehne + Nagel remains committed to serving our valued customers. We are working closely with carrier partners to provide solutions for urgent shipments. Additionally, we have also activated alternative transport modes and route solutions to support your business needs:
To avoid production and supply chain delays, and ensure the continuation of your operations, we offer specialised services and availability by air and sea. For urgent cargo, our sea-air and charter solutions, as well as special sea services, will help to expedite your deliveries and resolve your transport delays.
Starting from this week, we have established weekly charter rotations serving into and out of China routes. Our Sea-Air service, a combination of Seafreight and Airfreight transport modes, helps to expedite your deliveries and ease capacity constraints whenever possible.
Learn how Sea-Air can ensure the continuation of your operations.
We offer KN Pledge for full sea container transport. It includes a guaranteed lead-time for your shipments with a money-back guarantee.
Customers can review in real-time, all available services, including regular service updates via our digital platform, seaexplorer. seaexplorer enables customers to search for appropriate alternative service options in case of service disruptions.
Overall, tight conditions for Eurasian rail freight remain in place.
Kuehne + Nagel has proactively secured capacities via its KN EurasiaExpress in anticipation of the resumption of the China supply chain operations. This secured space will be available for our customers once China operations resume to normal.
OUR OPERATIONS IN CHINA
Following the latest local government directives, please find the revised operations information on our Kuehne + Nagel China branches.
(Accurate as at February 20, 2020, 10:00hr Beijing Time)
During this period of extended closure, please rest assured that our operational teams will continue to be on duty to support you and your organisation. All other offices in the Asia Pacific remain operational.
PERSONNEL UPDATES & PREVENTIVE MEASURES
Safety and health of our customers and employees remain our top priority. To date, as far as we are aware, there has been no report of an infected case within our workforce. We will continue to enforce the strict discipline of self-quarantine and temperature checking.
Our Business Continuity Plans are designed to ensure uninterrupted service to our customers and protect the safety and health of our employees. We have set in place, preventive measures and processes for all of our premises. This includes segregated work arrangements, sanitising our offices and sites and providing staff with necessary hygiene consumables at workplaces.
As the situation remains fluid, we will update you progressively. Meanwhile, please do not hesitate to contact your local Kuehne + Nagel representative should you require more information.
Thank you for your understanding and support during this period.
DISCLAIMER - All information is provided in good faith for guidance and reference purposes only. It is of a general informational nature, and Kuehne + Nagel takes no legal responsibility for the accuracy of the information provided via this document. Kuehne + Nagel makes no representation as to the accuracy or completeness of any of the information contained herein and accepts no liability for any loss arising from the use of the information provided.