The BOC Blast 351 – UPDATE Coronavirus – COVID-19 Origin Operations

UPDATE: Coronavirus/COVID-19 Origin Operation

Over the past week or so, the China government has reportedly lowered COVID-19 emergency response levels in some provinces, allowing workforce back into production. Return-to-work restrictions/requirements from the Chinese local authorities and some office building management teams remain in place.

A larger portion of our colleagues in China have returned to the offices, and the team is strictly following precautionary measures. While some teammates are working from home, we are operationally ready to manage business as normal:

Shanghai, Ningbo, Taiwan and Hong Kong: 100% of the teams are working in the office. 

Qingdao: 90% of the team is working in the office, with 10% working from home.

Shenzhen: 60% of the team is working in the office, with 40% working from home.

Xiamen, Fuzhou and Tianjin: 50% of the team is working in the office, with 50% working from home.

Dalian: 40% of the team is working in the office, with 60% working from home.

We continue to work with the relevant authorities to bring the full team safely back into our offices.

Other Market Developments

Drayage in China:  Cross-border trucking between China and Hong Kong continues to run, but it is highly recommended that bookings are made at least 2 days in advance to ensure driver availability. 

Availability of inland trucking in mainland China remains limited, advanced bookings of at least 2-3 days are required to secure trucking services.

International Air and Ocean Freight:  Production and export volumes from China have increased as the workforce returns, and demand for airfreight space, particularly to the rest of Asia, is picking up. There are also indications that ocean freight shippers are looking to switch modes in a bid to ‘catch up’ on schedules, further accelerating the demand for airfreight.

We are not expecting a quick reinstatement of cancelled airfreight capacity on both freighter and passenger flights outbound China, which we estimate to be well above 30% of last year’s global capacity (50% to the US, 50% to Asia, 35% to Europe), particularly passenger flights, as many countries maintain advisories against travel to China. At this point, we anticipate that airlines will initiate a resumption of capacity no earlier than the third week of March.

Airfreight rates soared on the China-Asia routes as capacity pulled out of this market is most significant, and demand for space has become ‘red-hot’. Air charters are in high demand, but supply is soft as the availability of aircraft and crew remain challenged.

The fallout from COVID-19 is strongly felt in the container shipping market. According to Alphaliner, Q1 2020 volumes at ports in China and Hong Kong are estimated to have reduced by more than 6 million TEUs due to the extended Lunar New Year holiday and COVID-19 containment measures.

Currently, container equipment is sufficient in China, but the availability of Non-Operating Reefers (NOR) is diminishing.

We will continue to update you as we receive more information. If you have questions, please contact your BOC Representative.