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Coronavirus Update

February 2020
 

 

The WHO has issued a statement on 12th March that the coronavirus outbreak can be characterised as a pandemic and is calling for all countries to take “urgent and aggressive action” to change the course of the pandemic.

Useful information for readying a workplace can be found in their release HERE.

  

Sea Cargo

Updated 23.03.2020

Vessels sailing from China to Australia after 1st February 2020 will not be allowed to enter port within a 14-day window of last being in China. This means for voyages taking 12 days, the vessel will have to anchor offshore for 2 days before being permitted to berth.  Pilots are permitted to join vessels before the 14 days have elapsed but are advised to wear personal protective equipment (gloves and mask.  If any single member of crew joins the vessel in China, the entire crew must serve the 14-day quarantine period.  Ships are already required to make a health declaration as part of their Pre-arrival Report, and some ports and State Authorities have added the requirement for ships to report their last five ports and the date that any crew members visited China.  This will add to delays and increase port congestion.

On 19th March Maritime Safety Queensland (MSQ) announced a ban on all commercial shipping into their ports.  While this measure was undoubtedly taken to protect the interests of the Queensland population and businesses, it gave little thought to the fact that urgent supplies, including medical supplies and food products, would be caught up as a result of the ban. On 21st March MSQ changed position in light of these facts and the strain that would be added to the domestic freight network when relocating goods to Queensland.  The Port of Brisbane will continue to receive international vessels, inline with the 14 day isolation period announced by the Federal Government, however all other ports in Queensland will remain under the guidance of Wednesday’s decision and foreign vessels will not be allowed to berth.  

Due to the unpredictability of the virus and the fluidity of each Government’s response, the Australia Peak Shippers Association (APSA) has agreed to waive the need for 30 days notice to be provided to shippers informing them of blank sailings.  Several blank sailings were announced in the first three weeks of February and Maersk Line has announced further blank sailings to Australia, Cape Marin v.011A ETD Xiamen 11th March 2020 and MDV Ethineu v.013S ETD Xiamen 25th March.  Further blank sailings remain a possibility and will be updated here as news is made available.

A report confirmed that a vessel from China to North Europe with a capacity of 23,000 TEU, sailed with only 2,000 TEU loaded on board.  Given similar reports form most carriers it has been estimated that the financial impact of coronavirus on the shipping lines could be as high as USD300-350 million per week as a direct result of the demand shortfall of exports from China.  It is not unreasonable to suggest that shipping rates will increase along with demand once manufacturing in China gets back into full swing.

Reports from our Chinese partners suggests that full service of COSCO’s A3S service from South China will recommence in week 11 (March 9 from Shekou).  An indication at least that business is starting to return to normal.

A lack of container movements has resulted in surpluses and shortages of equipment globally. Full and empty containers are currently congesting ports throughout China, and the lack of exports from China will ultimately result in a shortage of empty equipment for exports from other countries.  Both the United States of America and Europe are likely to be heavily impacted in the coming months.  To increase the likelihood of equipment being available, Henning Harders as well as our overseas partners will require early bookings for cargo movements from these origins. 

Reports from 12th March stated that MSC is deploying its mega-vessels to try and solve the container imbalance crisis by moving empty containers from China to the USA and Europe.  Two vessels, the MSC Mia and the MSC Nela will be rerouted in the coming weeks to increase capacity.  Both ships have a capacity in excess of 23,000 TEU (10,000 TEU more than the ships currently sailing the route) and will load empty containers in addition to the booked cargo, to deliver much needed empty equipment into North Europe and the United States West Coast.

Ocean carriers are reporting that circumstances are starting to improve at the major Chinese hubs.  The reefer plug shortage issue is improving which should see less shipments redirected to other ports.  The expectation is that shipping lines will start to increase their rates to help recover some of the estimated US$2bn in lost revenue from Q1.  More information will follow.

Maersk Line has announced a change in port rotation for vessels calling into Australia on its Dragon service in order to improve schedule reliability.  This measure is taken in view of the 14 day period vessels are required wait prior to berthing in Australia.  Effective from vessel Brevik Bridge v.011S, ETD Yokohama 10th March, the Brisbane southbound call will be omitted, adding 12 days for any freight destined for Brisbane.  The revised rotation is Yokohama – Osaka – Busan – Qingdao – Shanghai – Ningbo – Sydney – Melbourne – Brisbane – Yokohama.

 

Global Impact

Updated 23.03.2020

The number of cases outside of China continues to rise rapidly, with approximately three times the number of cases present in other countries, than those reported in China.  More than 192 countries and territories have confirmed cases of coronavirus, with over 335,000 diagnoses and 14,611 deaths recorded as at 23rd March 2020.  This equates to almost twice the number of cases and more than double the fatalities in less than one week.

Australia’s reported cases has more than tripled in the last week to from 377 on 17th March to 1,353 on 23rd March, with seven reported fatalities from the virus.  Many states are closing their borders and advising anyone returning to place themselves in self-isolation for 14 days.  Schools and non-essential services are also due to close and people are being urged to reconsider the need for any travel and minimise interactions outside of the home unless essential.

Italy, USA, Spain, South Korea and Iran have all been badly affected, with Italy reporting over 1400 deaths in the last two days. Governments around the world are taking drastic measures to try and ensure the safety of their populations.

The coronavirus outbreak in South Korea has seen factory closures and flight suspensions or cancellations by global airlines.  Some businesses have again introduced working from home.  In Hong Kong the school closures have been extended until 20th April 2020 and movement of passengers between Hong Kong and mainland China have been further restricted, with just the airport, Shenzhen Bay border and Hong Kong-Zhuhai-Macau Bridge.

Japan has also announced it will close all schools until late March due to the virus.  Many businesses will be allowing employees to work from home during this period.

Italy is in a country wide lockdown as cases continue to rise.  All public events have been banned by the Italian Government.  Denmark has closed schools and has sent home public sector employees that are not working in critical roles.  France has moved to “Stage 3” emergency level which places the country on partial lockdown.  All non-essential public spaces are closed until further notice.  Poland has suspended all flights and rail connections until 27th March, although the borders remain open for road traffic.  The United Kingdom has announced a three-month self-isolation for the vulnerable (the elderly and those with underlying health issues) and has closed schools, restaurants and pubs across the country.  Spain has closed all hospitality and retail outlets.  The Netherlands has closed sports clubs, restaurants and museums until at least 6th April.  Greece has closed schools and non-essential services.

Reports abound advising that shelf-stock globally will continue to dwindle for everything from car parts to household goods.  These shortages could well extend into domestically produced goods that rely on inputs from China.

There are reports of congestion at the Vietnam-China border due to increased truck movements and the rigorous health check and quarantine routines. 

Australian businesses trading with China are currently feeling the pinch, with exports of seafood, meat, fresh fruit and vegetables and wine heavily impacted as demand for these items slowed in China.  Australia simultaneously lost both its largest customer and its largest supplier, which will likely see disruptions persist for some time into quarter two and perhaps further.

India has introduced new screening requirements for vessels arriving from affected countries.  Vessels that are not cleared through this screening will not be allowed to berth in Indian ports.

 

Impact in China

Updated 23.03.2020

The latest in China is that there have been no new reported cases for several days.  Most factories are back to something resembling full production capabilities, and shipping lines and stevedores are currently working on clearing the backlog of containers at the ports.

 

Air Cargo

Updated 18.03.2020

Qantas has suspended its direct services to mainland China (Sydney-Shanghai) from 9th February until 29th March 2020.  Resumption of Shanghai services will be determined on advice from WHO and Australia’s Chief Medical Officer. The Sydney to Beijing service was scheduled to end on 23rd February but instead ended on 9th February in line with the suspension date.

The rapid spread of the virus to new locations has seen a reduction in flying demand.  Qantas has confirmed that they are attempting to maintain their usual connectivity however will do so with smaller aircraft.  This will extend until mid-September 2020 and will see a smaller freight capacity on many routes.  The Brisbane to Chicago route that was due to open on 20th April has now been delayed until September.  Strengthened demand for the direct Perth-London route will see a temporary re-routing to Sydney-Perth-London with effect from 20th April.

Many other carriers have cancelled or reduced passenger services to China, with some reports suggesting some two dozen airlines affected.  This has necessitated cargo being channelled to freighter services which are already operating to reduced schedules.  Reduced passenger services have removed capacity of over 6,000 tonnes of airfreight cargo per day.

IATA has published an initial assessment regarding the impact of coronavirus, with an anticipated 13% full-year loss of passenger demand for carriers in Asia-Pacific.  Offset against the previously expected growth, this would result in an approximate 8% reduction against 2019 levels.  To put that into monetary terms, this translates to roughly a USD 28 billion revenue loss.  It remains to be seen whether carriers will increase cargo rates with the anticipated increased demand in an effort to offset some of these losses.

Singapore Airlines, SilkAir and Scoot have made temporary adjustments to their services on selected routes due to weaker demand. In addition, there are capacity shortages to Shanghai, Beijing, Guangzhou, Hong Kong, Incheon and Taipei.  Space cannot currently be confirmed to these destinations at published rates.

Space with carriers leaving China is still very tight as a direct impact of the service reductions.  Most airlines are currently servicing only urgently required medical and health services goods.  Any space left is being offered to freight forwarders with rates increasing from the time that goods are booked to the time the cargo is delivered into the airline.  Unfortunately, the only way to ensure the space is allocated is to accept the higher quoted rates.  If you have any urgent cargo to move from China via air cargo please discuss this with your Account Manager.

The announcement by President Trump introducing a travel ban on all passengers between Europe and the USA for 30 days will increase demand for space and freight rates for this trade lane.  International carriers have already cancelled services, leaving vastly reduced belly space for freight between the USA and Europe.  Freighter aircraft will still be operating, and indeed may increase in frequency, however the airfreight rates for these services will likely be inflated.   

  

Export Cargo

Updated 18.03.2020

Many shipping lines are electing to hold transhipment cargo destined for China at transhipment ports until full operations resume in China.  This will help to minimise congestion in Chinese ports and allow port operators to clear the backlog of export cargo before large volumes of import cargo are received.

There are also reports of a shortage of reefer plugs for export containers at Shanghai and Xingang ports.  If you have any upcoming reefer exports these should be delayed if possible.  Maersk has announced a congestion surcharge effective from 7th February 2020 of USD1,000 per container to cover the costs of re-routing.  Yang Ming has also announced per container surcharges as follows of USD1,000 into Xingang; USD600 into Shanghai and Ningbo; and USD300 into Hong Kong or Macao.

OOCL has also advised that additional charges will be applicable for reefer containers arriving into Shanghai, Xingang or Ningbo. Rather than speak in monetary terms however, they have referred to Bill of Lading clauses 15, 17 and 18 which state that all extra costs for storage, demurrage, power, monitoring, plugging and unplugging at the alternative discharge port are for the account of the customer.

CMA CGM has lifted its reefer congestion surcharge to the ports of Shanghai and Ningbo as the ports have resumed normal operations.  Consequently, all reefers diverted to other ports are in the process of being loaded back to their intended destinations.

Maersk Line has announced additional blank sailings, being the Cape Marin v.014R, ETD Melbourne 30th March 2020 and MDV Ethineu v.016N, ETD Melbourne 13th April 2020.

The change in supply and demand of shipping services has seen some shipping lines implement a Peak Season Surcharge for cargo moving from Australia to most regions (except USA and Europe).

     

Travel Restrictions

Updated 18.03.2020

The Australian Government has imposed travel restrictions on all passengers arriving from overseas.  Effective from 16th March, all passengers travelling or returning to Australia will be required to self-isolate for 14 days, including Australian citizens.

There is currently a level four “do not travel” advice warning in place recommending Australians do not travel to China.  Australia is now also urging that travellers “exercise a high degree of caution” when travelling to Italy in the wake of the rapid expansion of the virus through the north of the country. 

New questions have been added to the Traveller with Illness Checklist (TIC) for biosecurity officers to administer and attempt to identify passengers arriving that have been exposed to Coronavirus.

Travellers are also urged to reconsider taking an overseas cruise at this time, particularly passengers with any underlying health conditions.  Some countries are not allowing passengers to disembark while others are denying entry to cruise liners altogether.

On 17th March the Australian Government has published advice for all Australian’s to reconsider their need for overseas travel at this time.  If residents and citizens are currently overseas and wish to return, they should do so as soon as possible by commercial means.  These returning travellers will then be required to self-isolate for 14 days.

   

Clearance Delays

Updated 06.02.2020

Concerns remain relating to delays in clearance at ports and airports due to lack of commercial and regulatory paperwork from suppliers and Government departments alike.

ChAFTA Certificates are currently not being issued due to Government office closures. Refund provisions remain available provided the certificate is produced after export and within 12 months of import (as per ChAFTA article 3.14).

Industry associations raised concerns with Department of Agriculture (DoA) regarding possible delays for consignments that cannot be released from Biosecurity control due to minor documentary amendments being required and not able to be obtained from the Chinese Authorities.  Advice received from DoA is that as the issues and delays are only anticipated at this stage, the Department will not be revising any of its documentary policies to accommodate.  If consignments are received that will be held pending documentation, movement of goods to an appropriate class of Approved Arrangement site should be requested.

If you have any shipments en-route to Australia and are missing documentation, please contact your Key Account Manager to discuss options.

   

As the news of the outbreak is ever-changing, Henning Harders will continue to update stakeholders as news develops.

Please contact your Key Account Manager  for further information.