Covid-19 pandemic impacts on your Supply Chain
When just few weeks ago, the forecasts for 2020 appeared to be less dramatic than expected, the beginning of the second semester reveals deep logistic issues that will continue to reverberate over the coming months. The pandemic seems to be controlled in the major of the european countries but the situation overseas will not allow a rapid economic recovery as some regions are still fighting against the virus.
This unforeseen situation brings out major challenges that impact supply chains and transport operations across the world.
To cope with this challenging time, agility and visibility are more crucial than ever to secure ongoing transport flows and closely monitor transport operations now and for the weeks to come.
Wakeo will provide frequent updates to support you through the crisis.
In the beginning of the recovery, the sea freight announced new services and seemed to give hope for a return to normal maritime activity. However, the 25th of June, the number of cancelled journeys between Asia and North America has reached 82 for the 3rd semester (it was only 13 two months ago). The International Monetary Found is not as optimistic as few weeks ago neither and now anticipates a downtown in the international trade which is closer to 11.9% (11% at the beginning) for 2020.
Carriers’ reactions was not long in coming as the 1st of July was already the 3rd GRI (General Rate Increase) being pushed in one month on Transpacific routes.
On the 2nd half of May, Covid-19 impacts on sea freight market are expecting to rise at an historical decline in volume with the possibility of a 10% decline in global container shipments for 2020. However, States are gradually reopening borders and shows signs of recovery.
From the very first weeks of the pandemic episode, authorities, ports and shipping lines have responded to the situation. As a matter of fact, shipping lines reaction did not last: 42 sailings have been blanked of the 252 scheduled on headhaul capacity in May. 2M partners Maersk and MSC suspended one headhaul Asia-North Europe loop and one Asia-Mediterranean loop for the entire 2nd quarter to manage an avalanche of cancelled bookings. The Ocean and THE alliances have also been proactively blanking sailings as the outlook deteriorates. However, despite the collapse in demand, with these withdrawals of capacities, carriers have been able to maintain spot market rates and surcharges above 24 to 40% year-on-year and redirect their activities on some roads as the Latin American market (+10% in demand).
Beside, to handle the activity, Port Authorities have established restrictions, temporary shutdowns and sanitarian rules to protect all crew members and avoid risks of contamination. In that sense, to cope with concerns with paralysis in the sector, 20 major Port Authorities signed the 24th of April, a Covid19 Declaration to collaborate and share best practices in ensuring that port operations are not disrupted. → Port Authorities list here.
Moreover, to prevent or solve the “mega congestion” issues, ports respond: indian or chinese authorities has required to unload all vessels with non-essential goods. More storage is offered by shipping lines (MSC has 6 terminal yards).
For most ports, the May forecasts about a huge collapse in container volumes are turning out to be less worse than expected such as the Port of Hamburg with a decrease of 6.6% in Q1.
Shipping lines updates - July 2nd
- Safmarine published latest business updates about their detention&demurrage policy, Peak Season Surcharges effective by May 29 and their activities in India and more.More information here.
- Hapag-Lloyd adds 100,000 TEU of capacity to keep goods moving. CEO, Rolf Habben Jansen, said that the company will continue the business as close as possible than usual. The company registered good signs during this period despite the global situation: + 9.2% of turnover. This is the result of the trade agreement between the USA and China, the new demand on the Latin America market and two new offers in 2019 that benefits for the Middle-East market.More information here.
- Hamburg Sud provides updates every day. Latest information about vessels from United States, Canada notably can be found here.
- Mediterranean Shipping Companyis obliged to set up an EBS (Emergency Imbalance Surcharge) for all shipments from Northern Europe to all destinations from 1st April 2020. On April 2nd MSC launched the “Suspension of Transit” program in order to prevent the resumption of cargo activity in China and congestions in terminals. Storage capacities are offered in 6 port terminals: Bremerhaven (Germany), Busan (South Korea), King Abdullah (Saudi Arabia), Lomé (Togo), Rodman PSA (Panama) and Tekirdag Asyaport (Turkey).
- CMA CGM informed its customers of the improvement in the availability of reefer sockets in Chinese ports.Consequently, almost all of the reefers transferred to other ports are being repatriated to their final destination.In view of these improvements, CMA CGM cancels the PCS(Port Congestion Surcharge) applicable to exports of reefers to all Chinese ports from March 23, 2020(date of loading). More information here.
- Orient Overseas Container Line have decided to postpone the launch of the new East Mediterranean – America Service (EMA) by three weeks until April 25. More information here.
- Maersk Line updated its Asia-Europe and Asia-Mediterranean networks to offer the most efficient and reliable services in integrated logistics. These updates are live on its systems now and will come into effect by 1st April 2020:
- HMM informed that the availability of Reefer Containers in North China, Shanghai, Ningbo, and Tianjin, has been improved and has reached a normal situation.Obviously, yard plug are now more available and the occupation ratio of the terminals in the three ports has been relieved.From this point of view, HMM hereby announced the cancellation of Northern China Reefer Congestion Surcharge; effective 19th Mar 2020.
Port updates - July 2nd
Cargo handling continues at US ports despite coronavirus spread and cargo volume impact
- The Port of Savannah in Georgia, will be closed to truckers on Saturdays in April due to blank sailings. Container volumes fell 6.7% in April (besting initial forecasts of a 15% decline) but port officials have a sour outlook for May and June, with more than 60 voided sailings. The next two months could see total volumes plunge more than 20% at the US southeast’s largest port.
- The Port of Los Angeles said all terminals were operational and reported a year-over-year March volume drop of 30.9%. USNC Mercy arrived on March 27.
- The Port of Long Beach’s terminals also are open and operating, although administrative buildings are closed to the public through March 31.
- JAXPORT’s cargo terminals in Jacksonville, Florida, remain open with no restrictions. Same for Miami.
- The Port of Baltimore remains open for business. The Seagirt Marine Terminal will be closed on April 8 and 10 due to current declines international container volumes.
- In New-York, cargo volumes at the region’s ports are expected to drop 30% this month, compared to March of last year. The second USNC Mercy arrived on March 30.
- In France, the Port of Marseille Fos and Port of Le Havre announced that they continue their activities while respecting the health guidelines.
- The Ports of Hamburg, Rotterdam and Port of Antwerp are part of the Covid19 Declaration, committed with 17 others Port Authorities to collaborate and ensure that the global supply chain keeps going on. Antwerp registered an increase of 4% in the first quarter compared to 2019 thanks to the pharmaceutical industry and e-commerce. But the Port is not as optimistic for the next months, expecting Covid-19 pandemic impacts.
- The Port of Bremerhaven also remains in service, fully operational and announced a deferral of claims for port charges for the period 1 April to 30 June 2020.
Focus on Italy - All shipping companies have confirmed arrivals and departures from Italian ports. For the time being, even container pickups and deliveries have no restrictions. At terminals in other ports there is the possibility that what is happening in Genova could also happen.
- Genova / VTE port - there are long in/out delays for terminal operations and this is causing hindrance in pickups and deliveries; hence extra cost and the possibility of losing the VSSL ETD
- In Venice, there is a critical situation that is delaying the custom clearance and operations in the port. For security reasons there are some terminal restrictions which are causing additional delays to custom clearance and operations in the port.
- The Port of Shanghai after a drop of 20% container throughput in February year-on-year, is going back to a normal activity.
- In Singapore, although crew changes had been suspended due to the recent heightened risk of imported cases of COVID-19, the Maritime & Port Authorities of Singapore is to allow crew changes under “special circumstances”.
- Qatar Ports implemented series of measures to limit the spread of coronavirus which also ensure uninterrupted supply of goods in the country. At Hamad Port, no one is allowed to board a vessel and workers’ health is monitored around-the-clock. Qatar Ports have registered around 250% increase in general cargo handling in April year-on-year demonstrating their vital role in ensuring smooth supply of goods.
- The Port of Salalah, in Oman, will be prioritizing deliveries of food and essential supplies as the situation demands.
The shock caused by the Covid-19 pandemic on air transport is "extremely brutal" as stated by the General Director of the International Air Transport Association (IATA).
Airlines will need to be granted a huge financial support up to $200 billion to face the dramatic cancellation of scheduled flights from the beginning of the health crisis. Borders shutdowns for an increasing number of states combined with the complete interruption of some airlines also result in airport closures.
IATA now forecasts airlines will lose $314 billion in passenger revenue this year amid the coronavirus outbreak. As airlines worldwide ground their aircraft in the wake of a collapse in passenger demand, the industry has passed a key crossover point with the number of stored jets now exceeding that of the active fleet.
Flight cancellations mainly impact passenger transport but also impact freight activity through a lack of space offer.
Latest news: https://www.flightglobal.com/news/airlines
Some airlines cancellations updates:
- Lufthansa Cargo AG
- Qatar Air Cargo
- Emirates Sky Cargo
- Turkish Airlines
- Air France KLM Martinair Cargo
- Cargolux Airlines International
- TAP Air Portugal
- American Airlines
- Singapore Airlines
- Cathay Pacific
Airports updates - July 2nd
- Orly closed two out of four Terminals from Monday March, 23, Orly 1 door A and B and Orly 2. Due to the drastic flight decrease, ADP announced that the airport will be closed from March 31st until further notice. Only medical flights will use the airport.
- Roissy Charles-de-Gaulle closed two Terminals out of nine, 2G and 3 on Sunday, March 22 evening. ADP announced further closures from March 30 to keep only Terminals 2A, 2E (Hall K) and 2F open until further notice. The air traffic has declined by 58,5% in March year-on-year. By Monday May 11, all the sanitary rules have been reinforced: masks on sale at the entrances and given at terminals, hydroalcoholic gel dispensers and compulsory social distancing.
- Marseille Provence Airport has closed most of its terminals from Wednesday, March 18 and expecting a 45% drop in air traffic in 2020. Commercial domestic flights could operate from May 28.
- Lyon Saint Exupery transferred its activities from Terminal 1 to Terminal 2 due to the sharp decrease of air traffic. The May 8, the airport set up its first humanitarian airlift to Central Africa to bring medical staff and equipment.
Charleroi Airport has announced its closure from March 24 and may not reopen commercial flights before June 8 while Brussels Airport remains open. Wear a mask is not mandatory but they are available in the airport with hydroalcoholic gel dispensers.
Amsterdam Schiphol Airport is working to ensure that only the Departures 2 and 3 will be in use for passenger flights from Tuesday 27 March. A flight ban have been established for passengers flights from mainland China (including Hong Kong), South Korea, Italy, Iran, Spain and Austria until 10 April 2020 6pm. The EU entry ban for non essential trips have been extended until June 15 (with some exceptions).
Frankfurt Airport is maintaining operations through Terminal 1 Concourses B&C from April 7. Passengers flights have dropped of 95% the first week of April but cargo activity increased by 25% compared to the same week last year. According to the senior vice president of cargo for Fraport AG Max Conrady, as of May 8, the airport is managing 250 air cargo flights per day.
Manchester Airport is still operating essential flights but has closed Terminals 2 and 3, with all departures and arrivals taking place at Terminal 1. May 7, the airport has introduced new rules for passengers: face coverings which include masks, scarves or other makeshift face coverings. Every passenger will also be scanned by a heat-seeking camera in Terminal 1 that will scan for high temperatures.
Shanghai Pudong International Airport handles most of the international traffic. Inbound travellers are required to spend 14 days in quarantine. The airport continues to choke on COVID cargo, however, new procedures and shipping practices could ease congestion by the end of the month.
Numerous challenges result from the ongoing health crisis and impact international transport operations including:
- Uncertainty on sea freight lead times or airlines space capacities make it complex to efficiently manage transport flows including internal supplies and deliveries to customers.
- Containers imbalance is to be feared considering that the problem of repositioning empty containers in the West has never been more serious since the coronavirus weights on cancellations of stopovers in China and empty trips.
- Extraordinary costs are likely to increase significantly due to the widely closing of warehouses and distribution center in the EU and the USA that will lead to higher Demurrage and Detention costs at ports.
- Blank sailing - Roll over, uncertain demand and offer on shipping market leads to a need to control on real time basis your shipments onboarding.
Wakeo can provide you with some keys to overcome this challenging time:
- Leverage real time visibility based on enriched tracking data (including AIS and ADS-B) to reliably monitor ongoing shipments and communicate up-to-date information to your internal teams and customers.
- Identify deviations proactively and receive predictive ETA through automated alerts to manage by exception and increase agility.
- Monitor your costs including Detention & Demurrage fees thanks to our in-house Analytics module.