Corona Virus and Latest Global Implications

Further to our last notice, sent on Monday regarding the Corona Virus and its impact on the shipping industry, we are writing today to further update you with the latest information. As you would expect, there has been an increase in restrictions imposed by various countries as the virus spreads. The effects of these restrictions have been devastating for businesses across the globe and the more this virus spreads, the more industries it impacts. Yesterday across Australia, we saw the retail sector taking drastic measures to survive during this period of uncertainty. Airlines (Excluding cargo transportation), tourism and travel industries have come to a complete standstill in terms of their business turnaround. All this is happening while the death toll from the virus in Italy and Spain keeps rising dramatically and both these countries have now recorded more deaths than China, where the virus originally emanated.

During the last couple of days, we have received the following updates from different parts of the world which are impacting the shipping industry directly:

Air Freight Across the world:

Passenger aircraft normally carry  80% of all Air cargo and with the cessation of  around 90% of all international passenger flights, space for airfreight is the worst it has ever been. Consequently we are seeing the following;

• Almost a four to five-fold surge in air freight rates from Sweden and Germany to Australia.
• Direct air freight rates from China have jumped up approximately 7 times and transhipment rates by 4 to 5 times as compared to normal air freight rates.
• Given the uncertainty created by the COVID-19, Airlines have stopped offering longer validity or tariff rates for any trade route,
• The capacity for air freight is significantly limited with only Freighter aircraft operating . Some airlines have started converting  passenger aircraft for cargo movements.
• Air freight rates are going up almost on an hourly basis.
• Even with a confirmed bookings, we have seen instances where the cargo was rolled over.

 

Lockdown in India, Malaysia, Italy and New Zealand:

 

• The lockdown and restricted movement rules which were initially introduced by Malaysian Government until 31^st of March 2020, will now be extended until 14^th of April 2020.  In order to comply with these restrictions, the majority of shippers located in Malaysia have either ceased production or significantly slowed production down. If you have any shipments from Malaysia, it’s worth checking if the supplier’s production capacity is still on schedule, or is affected by these measures.

 

• India has been placed under a complete lockdown for three weeks since last Monday (23/04), while the government authorities analyses the situation and plan a future course of action. The latest update we received, overnight, suggests that majority of carriers have cancelled their flights at least for the next two days. Organizing shipments from India during this time will be a significant challenge due to the lockdown and indeed may prove impossible.

 

• Latest update from Italy is that most of the suppliers have closed and will resume on 6^th of April, unless the authorities decide otherwise. Only the activities which are considered as strategic will remain open. Majority of flights have been cancelled as is the case with other countries. Trucking companies are still operational with limited drivers and are still picking up/delivering goods where possible, despite a longer than normal turnaround time.

 

• As advised in our last notice, New Zealand is in a full lockdown for 4 weeks. Only essential businesses are open but the actual definition of essential businesses may change in the coming days as NZ government analyses the day to day situation. One estimate puts the number of businesses which have shut down during this lockdown period at 60% to 70%. Our partner in New Zealand remains open and operating remotely. If you are intending to import from New Zealand it is imperative to establish with your supplier as to whether they are operating.

 

In addition to the above countries, there have been significant restrictions in other parts of Europe including Germany/UK/France/Spain etc. If you have any shipments going in, or coming out of these lockdown countries, please contact your customer service representative for the best course of action.

 

Lockdown of Lautoka Port, Fiji

 

Due to the COVID-19 outbreak, authorities have locked down the Lautoka port and have decided to halt the acceptance of all container vessels. Port of Suva still remains operational and cargo bound for Lautoka port has been diverted by carriers to port of Suva. Exports out of Fiji will also have to come out of Suva port while  Lautoka stays in lockdown.

 

Brisbane Port Arrival – Vessels should be at sea for 14 days (Revised):

 

As per our last notice, any vessels arriving in Brisbane port should have been on the water for more than 14 days before docking at the Brisbane port. This notice is now revised and will only apply to vessels arriving either from Mainland China or South Korea.

 

Reefer Situation in China:

 

Situation with reefers going into China has now improved in Shanghai, Ningbo and Xingang. Previously, there was no available plugs and carriers were imposing hefty port congestion surcharges for reefer cargo. Some carriers have started removing this surcharge as the situation in China normalizes.

 

Working from Home:

 

As more and more countries try to cope with the virus situation, employers are asking their staff to work from home as much as possible. This is happening across the globe. In Australia, shipping lines, non-essential workers and even a good number of essential workers, have been asked to work from home. This is to enforce social distancing measures as enacted by the Australian Government.

 

Even industries where it is crucial for employees to be physically present – warehouses, trucking companies etc.- extra care is being taken to ensure the safety of staff and to minimize the risk of virus spread. Staff are being asked to take strict sanitary measures and wear appropriate personal protective equipment. To minimise person to person contact, most Carriers have requested the  use of electronic documents, instead  of the normal physical documents.

 

Shortage of Quarantine Officers:

 

We have received update from our transport carriers that they have experienced a shortage of Quarantine officers at their premises to conduct the rural tail gate inspections. If the situation continues, some of the bookings for tail gate inspection will get delayed. It is our understanding that the management of DAWR are aware of this situation and are working to rectify.

 

FCL Rates and Dangerous Goods (DG) Cargo Situation from China:

As businesses go back to normal in China, we have seen an increase in demand for cargo moving out of China. FCL rates from China to Australia have increased by 30%-40% as compared to the last week prices.

We have also seen a lot of companies here in Australia trying to import hand sanitizers containing alcohol. Airlines are simply refusing to carry this DG cargo, whereas the ocean carriers are applying very strict requirements and limited acceptance for this type of DG cargo. If you are planning to import these goods, please check with us about the latest developments in this regard.

 

Some Shortage of Reefer and Out Of Gauge Equipment (OOG):

 

In light of this crisis, we have experienced some shortage of reefer/OOG equipment as the virus has disrupted the normal flow of these containers from different parts of the world. Due to the trade halt between China and other regions of the world during the initial period of the crisis, an imbalance of this type of  equipment was created in various areas of the world. Some countries have excess, whilst  others are having a shortage. Carriers are trying to reposition the equipment  in line with the demand and supply.

 

Our Contingency in Case of Lockdown in Australia or any of the States:

 

If Australia, or any of the states,  go into lockdown and your industry is affected, we have various solutions we can utilise to store goods on your behalf. Storage facilities vary between trucker storage facilities right through  to bonded warehouses. We have already gone out and approached these companies and have pricing on various the options available. We can store FCL, LCL or, unpack FCL and store loose so as to enable the empty container to be returned. Please bear in mind if the lockdown does occur, this space will rapidly disappear, so please contact us immediately should you need this facility.

 

Finally, we would like to ensure you that Dieterle & Victory are here for you and your business. Even during these extraordinary times, it’s still business as usual for us, as we are considered an essential service. In addition,  we positioned all our staff to work remotely two weeks ago, with contact by phone or email operating as normal.

 

Dieterle & Victory will keep you updated as more information becomes available.