Recommended Actions

• Planning and forecasting volumes have never been more important than it is now. Both to avoid overages and to secure the appropriate level of carrier capacity.
• Your regional logistics teams are working on Block Space Agreement (BSA’s) with our carrier partners to secure capacity to reduce costs on air and ocean lanes. Please reach out to inquire about specific lanes to your regional logistics team. Some of these options may require a change in your normal operational processes.
• Continue to review calculated lead times to confirm it includes the most up-to-date transit times for your specific trade lane.

Global Air

• Some improvements from the Airport Ground Operations Service in Shanghai were anticipated this week. Manpower of the handling staff was expected to be back to 70% from September 18. However, the continuation of specific COVID-19 containment processes and an extended quarantine period mandated by local authorities continues to impact aircraft handling and the available capacity of all organizations operating from PVG Shanghai airport.
  
  In addition, there was an unfortunate setback related to the impact of the recent Typhoon Chanthu which resulted in a temporary closure of PVG Shanghai airport on September 13, leading to more than 80% of flights being cancelled. Confirmed booking allocations on specific flights are needed before cargo is accepted into the terminal.
   
• Moving into peak season, capacity access is already critical due to a strong surge in market volumes, year-on-year. Market volumes increased further as demand continues to remain strong throughout the summer season while capacity remains limited.
• Major airfreight freighter operators are preparing for the peak season with key maintenance checks currently performed to ensure the aircrafts are available during Q4 2021 as demand is expected to further increase in the coming months based on industry forecasts.
• The market is therefore expected to remain congested considering the large impact of mode shift from ocean to air of critical shipments. There is also a significant increase in large shipments in the market that requires access to freighter capacity. This will cause further congestion to the existing market imbalance of supply vs demand.
• Chinese airport authorities have taken drastic measures to prevent the virus transmitting from overseas to China, which has affected or will further impact capacity and airfreight operations from/to China.
  • Fumigation requirements are now applicable to all incoming cargo flights.
    • More complex disinfection processes are being implemented.
    • Airlines’ crew layovers on their freighter operations have been ceased.
    • Ground handling manpower is considerably impacted.
    • Some airlines are only allowed to operate with 2-hour turnarounds.
    • More flights are being cancelled (the latest update via flight cancellations).
    • It is increasingly difficult to get permission for additional charters.
• CGO airport remains with huge backlogs on import cargos. Other CN airports – Beijing, Chengdu, Guangzhou, Hangzhou, Shenzhen, and Tianjin remain similarly constrained.
• Other Asia airports – BUS, MNL, PKL, SIN, TPE, HKG, HCM and KUL are experiencing high utilization and remain similarly challenged due to various impacts of infections monitoring on flight crew, terminal handling staffs and containment measures. As preparations begin for the golden week holiday at the end of September, this will lead to additional stress levels to all the cargo in backlog. Transit times are expected to extend and become less predictable due to limited capacity and high demand.
• Chinese Holidays 2021
  • Mid-Autumn Festival: September 19-21.
  • National Day: October 1-7.
• Nearly all usable freighter aircraft are in use, meaning we will remain in a challenging market condition for the balance of 2021 and into 2022. Our commercial airline partners are not expecting significant flight additions for the remainder of 2021 which will also keep the cargo flights constrained into 2022.

Global Courier

• DHL has extended their current limitation of 300 kg per pick up location (customer collection) per day, until further notice.
• FedEx is experiencing a project surge in outbound shipping volume before the mid-autumn festival and National Day of China and has announced transit time increases for FedEx Express outbound shipments from Mainland China, Hong Kong SAR, Macau SAR and South Korea by 1-3 days. From Shanghai to Europe, there is a 100kg restriction per shipper, per day.

FedEx Europe Updates

• Reported 400 trailers were added within this calendar year into European road network to support lanes where they have seen the biggest capacity pressure.
• New road hub in Elst is about to open for business. As of October, it will welcome first volume and as of November, they expect full ramp up. The new hub will bring relief to currently pressured Eindhoven station which has taken lots of Duiven activities once hub was closed, resulting in reduced service levels.
• Update around CDG air hub - construction works are in progress to expand the hub and important milestone is now achieved with incremental 50k m3 of facilities added. Improvements are aimed to increase sorting efficiency and prepare air network for expected volume growth.

Asia Ocean

China - SHA Ocean terminals were also closed on September 13 due to typhon Chanthu but resumed back operations the next day. Port congestion continues. Ningbo port similarly sees all its terminals heavily congested. Other ports in China are likewise encountering similar constraints at various levels due to likewise varying challenges; including Shekou, Yantian and Hong Kong ports from berth and terminal congestions.

Other Asia – BUS, MNL, PKL, SIN are experiencing high utilization and challenges/constraints including lower productivity arising from congestions and high yard density.

• Capacity and equipment constraints due to peak season ahead of China National Holiday.
• Most APAC countries are in lockdown due to COVID, and we are seeing cargo shift from Southeast Asian origins to China which may be an interim situation.
• Shortage of empty containers remains an “industry-wide challenge” across Asia.
• Blank sailings and last-minute roll over continue due to port congestion, with continued serious roll over at transshipment ports.
• A total of 200 confirmed COVID-19 cases and 21 asymptomatic cases have been reported in

China's Fujian Province on September 16, according to local health authorities. Impacts on Xiamen Airport / Seaport operations and Trucking/Pickup services:

• All drivers must present green health QR code + negative nucleic acid test result within 48 hours.
• Pickup from medium-risk and high-risk areas now suspended. Pickup from other areas needs to be ordered at least 2 working days in advance.
• Trucking service: trucking out of FOC/XMN in Fujian Province to other gateways such as PVG/HKG etc., will also need extra 1-2 days for transit time.

Europe Ocean

• The 2M is the first alliance to announce blank sailings over China’s October Holiday period and has left some shippers in limbo, with booked cargo on the cancelled sailings and still struggling to find capacity on brim-full export ships from Asia.
• Maersk and MSC, the 2M partners, have cancelled four scheduled Asia-North Europe loops in weeks 39 and 40, thereby removing some 70,000 teu of capacity from the route.

Americas Ocean

• The port of L.A./Long Beach set a new record with 55 vessels at anchor awaiting a berth. And the traditional surge of pre-Golden Week holiday vessels is just about to depart China. Now there is a concerted effort on the part of the ocean carriers to push importers to expedite empty container returns. If you receive containers into your plant, please unload and return quickly to the carriers. 

• Despite the recent “Spot Rate” freeze through Feb. 1, 2022, as announced by CMA-CGM, rates are not expected to fall much, if at all, between now and the start of China’s Feb 1 Lunar New Year holiday.
  • Action: Please plan logistics costs forecast accordingly, we are working on Block Space Agreements (BSA) to reduce these costs and will communicate with your BU if we have been able to secure these rates on your particular lanes.  

• Importers of goods from Asia should continue to plan on delays of 30-45 days beyond an ocean carrier’s posted transit times.    
  • Action: please update forecast lead times in the system as well as communicate to your customers of these delays.

• There is large backlog of trucks waiting in the port of Manzanillo (ZLO) to get loaded with cargo. There are 24 vessels at berth and 36 on their way to the port. It is just as congested as the US west coast ports.

• Hurricane Nicholas rocked the Gulf Coast this week, causing closures and power outages at several ports, including Freeport Harbor Channel and the Port of Houston.

Europe Rail

No changes since last week.

Americas Ground

No changes since last week.

Please do not hesitate to contact us directly with any questions, 

Ruth Maciver, Director European Logistics 

Jeannie Carpenter, Director Americas Logistics 

Francis Loh, Director Asia Logistics