Coronavirus affecting supply chains
As previously informed, the Chinese authorities are trying to contain the spread of the fatal Coronavirus and has thus prolonged the Chinese New Year
UPDATE: 25 February 2020
Provinces across China are gradually resuming work, and the productivity levels are rising. Local transportation possibilities are increasing daily, but still with regional differences, due to different restrictions in the regions.
Due to the situation, air and ocean freight capacities have decreased during this period: for air freight capacity, almost 40% has been withdrawn from the market - and for ocean freight, due to blank sailings, approx 60%.
The prolongation of Chinese New Year is now over for the majority of the Chinese regions (except the Wuhan region), and the manpower and officials of the country have officially returned today.
It will, however, be a quiet start where part of the office staff will continue to work from home. Also productions as well as local logistics will still be limited due to quarantine periods of up to 14 days for people crossing the region borders. The quarantine periods will vary dependent on the region and mode of travel for people returning to their region.
In reality this means that the factories are running with limited manpower, and collection and delivery of goods will still be problematic due to shortage of drivers.
We are constantly monitoring the situation in China but be aware that it may change from day to day. Therefore, we urge you to always contact your local Blue Water employee for further information.
With the exemption of Wuhan, carriers inform that all ports and terminals are now working normally, but the activity level is still low due to the issues of missing volumes and lack of drivers.
The shipping lines are still cancelling further departures, as the goods cannot reach the ports. This will of course affect the sailing in the coming weeks to and from the Far East.
When China reopens, bottlenecks will arise due to the high pressure on capacity, and consequently result in cargo congestion, local trucking challenges and changes in transit times. For further information, please contact your local Blue Water office.
The long period with no possibility of shipping goods out of China will also be a challenge for export from Europe, as the lack of shipments from China to Europe will result in shortage of containers for the coming export. We therefore recommend our customers to book in due time so that we can do our utmost to handle the unavoidable pressure on the capacity.
As the situation will change continuously, we recommend that you approach your local Blue Water contact to be updated on the latest news.
Volumes are still low in China, and in order to balance capacity with demand, the carriers are cancelling more sailings at very short notice.
Capacity of approx 60% has been withdrawn due to blank sailings, and further blank sailings are planned at the end of February, start of March.
This will limit the options of carriers available, and since further blank sailings are planned, we expect that the pressure on the remaining capacity will increase.
For the export from Europe to China, the lack of import will cause lack of equipment for the export, as well as fewer options due to blank sailings.
Impact on other origins/regions
Looking outside China, the current wave of cancelled sailings is going to cause issues for shippers in South East Asia and the Indian subcontinent in the weeks ahead. Many of these origins rely on connections to the China vessels in Singapore, Tanjung Pelepas and Colombo, and those ships are the same ones that are now cancelled.
Most international passenger flights to/from China have been cancelled due to the Coronavirus. Only a few international and Chinese passenger flights are still operating. Cargo flights are still operating but with reduced schedules. The cancellations result in increased pressure on the remaining capacity and therefore we can expect rates to increase significantly.
Operation is still stable to/from all other Asian markets, but we can expect rate increases once the Chinese production returns, and especially if, as expected, some of the supply chains move to other countries.
Please feel free to reach out to your local Blue Water contact for further information.
Outbound China market
From CN to EU space is OK, but rates are expected to increase as production returns. We are operating with weekly consolidations from all main airports.
As a contingency plan we can make use of Sea-Air ex China via Singapore and Korea.
Inbound China market
From EU to CN space is extremely tight, and rates substantially increased.
We have weekly departures by rail from China which you can read more about
For further information including next departure, please contact your local Blue Water office.
Up and running with steady departures, but subject to inland trucking into rail hubs.
However, departures ex Wuhan still suspended, adding additional volume and pressure on the remaining rail hub. And with backlog from CNY, the capacity is minimal.
Courier transports are also affected by the Coronavirus, both import, export as well as cross trade to/from China.
We are monitoring the situation and are working closely with the carriers and our agents and offices, but of course the impact on this situation will unavoidably influence the flow and the orders. For us to be able to help best possible way in this situation, we recommend you to forward forecast of orders for us to use in our planning and ordering flow towards the carriers, airlines and rail operators.
For further information, please contact your local Blue Water office.
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