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.
Coronavirus / COVID-19 Operational Update
- Work Arrangements – Our teams are working as much as possible, guided by advice from local authorities to protect the well-being of our staff while maintaining maximum coverage and minimal operational disruption as possible
- In China, our team is operating either from our offices or their homes, and we have implemented tiered working hours.
- In Hong Kong, a portion of our staff is working from home while the rest is working from the office.
- Market Developments
- Factories in China are gradually resuming operations at a varying pace, a slow ramp-up in production and exports are still to be expected.
- Drayage in China: Various provinces and cities have imposed restrictions on the entry of non-residents and vehicles registered outside their localities. This has given rise to a shortage and/or rate increase of inland trucking in the mainland China as truck drivers have not been able to return from their hometowns to their work regions post-holiday. Advanced bookings of at least 2 days is required to secure trucking services.
- Air Freight: A large number of passenger and freighter flights to and from China have been cancelled, severely impacting capacity. Though freighter flights have gradually been reinstated from last week, with demand far outstripping supply, airfreight rates will likely be much higher than normal.
- Ocean Freight: All Chinese ports except Wuhan are currently operational. However, many container yards have yet to re-open, potentially causing equipment shortages.
- Global Port Developments
We will continue to monitor the situation closely and provide updates as we have them. Please contact your BOC Representative, if you have any questions.