The Coronavirus is continuing to cause issues to global supply chains with many of the large manufactures around the world issuing warnings of potential hit to full year profits.  This has highlighted how important China is in supply chains across the planet today. Many companies have urgently started to try and move manufacturing to other countries including  Vietnam and India. Few of these countries have the capacity to available to meet the sudden demand, and even ones which can it is going to be many weeks before these products are able to get the end consumer.

In the UK one online furniture supplier warns that while they have sufficient stock due to the delays in factories restarting up they are facing the a break in their supply chain. They rely on a constant supply of containers from China manufacturers. They have additionally stock to cover the Chinese new year shutdown, however they expect to run out of the most popular items within the next few weeks. If they have to stop selling certain items not only does it mean a loss of sales, but also a drop off in Amazon, Ebay and Google rankings. As a result once the supply chain out of China is reestablished, it will take time to get sales back to previous levels. The owner does not expect to have to lay off any staff at the moment this may become required if the crisis continues.

Transport operators are not fairing much better. Both shipping lines and airlines (cargo and passenger) have lost large amounts of money over the past few weeks. Many shipping lines have added blank sailings into their schedules to prevent their vessels getting delay at Chinese ports. Airlines have cancelled virtually all services and are not accepting bookings till the end of March for many Chinese destinations. Additionally with the virus spreading to other countries many Airlines are reducing their services to these areas. Easyjet which is low cost operator in the UK, is taking drastic action to reduce it costs in the face of falling passenger numbers, these include pay freezes, reduction of administration costs and offering staff unpaid leave.

Despite all the bad news, for China the official line is amount of new cases being reported is dropping and if news reports are accurate then virus now seems to be effecting more people outside of China. This is reflected in the current port operations in the Port of Ningbo, China. This port has over 24000 registered truck drivers, at the height of the crisis it had less than a thousand actually working. This figure has now reason to over 7000 by the end of last weekend. This means container through put has gone from virtually nothing to 13000 twenty foot equivalent (TEU) units being moved per day at the start of the week. Other Chinese ports are beginning to clear through their container backlogs.

Shippers need to be aware that as factories begin to return to full operation and there is a rush to get goods to the ports, space will become a premium on the vessels and as result rates will be expected to rise and containers will sit on the quay longer than normal while awaiting a vessel with space. Price issues and space availability is effecting airfreight imports and exports as there is considerable reduction on available flights currently. Booking space as early as possible is currently the best recommend action for shippers.

The Coronovirus is continuing to have an impact supply chains involving China. This is being particularly felt on reefer shipments. Many shipping lines  have issued warnings to shippers exporting to China that there is a severe lack of space for reefers in certain ports. The inability to be able to move containers off quay to distribution centres and factories  is causing a major headache for ocean freight forwarders and shippers of temperature controlled products.

Safmarine is the latest shipping line after CMA-CGM and the ONE Shipping Line who have now had to issue a notice that they need make a surcharge on reefers to ports of Shanghai, Xingang and Ningbo due to the complete. Safmarine are adding 1000USD per container to all bookings from 28th February. The issue is so critical now that the shipping line is offering to divert reefer boxes destined to these ports free of charge to other Chinese port, which is very rare for any shipping line to do. Shippers who are making new bookings for these ports need to be aware the shipping lines no longer guarantee the cargo routings,  nor will they accept any responsibility for the delivery time of the containers. Containers may be diverted to other ports at the discretion of the shipping line if there is no space available at the destination port.

There are some reports of shipping lines declaring general force majeure on all reefer traffic destined for these ports. They are going have them offloaded at other Chinese ports. It will be the responsible of the freight paying party to arrange them to be moved to the final destination. All shippers should be aware of the potential costs both in monetary and time future shipments may incur. It is recommend they constantly keep on top of this developing situation as it may continue to get worse, as the ports cargo is being diverted to begin to fill up.

The logistics industry is like a lot of  established industries is very slowly being dragged into the digital world.  AJF introduced its own API over 12 years ago the first small freight forwarder in the UK for its clients, when  no other small forwarder had one and larger shippers were using EDI.  Even today most shipping lines are only now creating customer portals and none of the have any form of API’s available for there clients.

AJF online facilities have continued to grow over the this period.  The role out of our customs clearance api and additions to the clients portal of a dedicated customs brokerage area will allow the submission and management of clearances a lot easier.

Part of this push to increase digitisation is due to us expecting to move from the old HM Customs Chief system to the new HM Customs Customs Declaration System(CDS). The new CDS requires more information from shippers and consignees and by having it submitted to us electronically helps reduce errors and speeds up the submission. Through the API and the port  clients will have the ability to do the following:

• Calculation of Duty / VAT immediately
• Check if commodity code is correct
• Check if licences  or port health required
• Advise if reduced rate of duty available
• Download copies of C88’s and other documents for previous entries

There will be four ways to be able to send us the customs clearance information:

1. By use of our API
2. Using the bulk upload manifest tool in the client portal
3. Entering manifest data by hand into the information into the client portal
4. Sending us a spreadsheet in our required format by email of the manifest data

Options 1,2 and 3 will be a our preferred option with lower customs clearance charges being applied. Currently being tested by several of our clients. We will have available a spreadsheet to download which can be used in our bulk upload tool or you can create your own based on it. We plan to make these customs clearance improvements available to all of our clients by the end of June.

This is further update on the continuing impact of the COVID-19 virus on logistics and supply chain services in China. Currently the rate of infections being reported has slowed down in China. However there are new cases being reported other countries around the world which did not have them before which indicates the virus still has not been full contained. The overall situation is still very fluid.

Within China transport links within provinces are gradually returning to normal, however there are still restrictions on trucks moving across province’s borders.  Chinese authorities are giving permission to more manufactures to reopen factories and restart production, however some factories are still very cautious about opening as they are worried when workers start returning to the factory sites it may start off another outbreak of the virus and the factory being shutdown again. Additionally some workers are still reluctant to return from fear of getting infected creating a labour shortage in some regions and causing production output to be reduced.

It has been reported that to date the world’s biggest shipping line Maersk has cancelled 50 sailings from the China mainland to worldwide destinations. With ocean freight shipping suffering greatly with blank sailings and inability to get containers loaded, inter continental rail freight shipments from central and western china have seen a rapid increase in demand. The increased demand has resulted in a shortage of available capacity on most routes to Europe. Containers are now having to be stored awaiting the next available train with spare capacity. This is adding in some small delays of up to a week, however for most clients the time saving is still worth sending it on these routes. There has also been a subsequent increasing of rates to try and help manage demand.

As before if you are a shipper having issues with your goods leaving china and want to explore alternative routings or markets then you should get in contact with AJF and will see if our expertise in logistics and supply chain issues can assist you.

The Coronavirus,now officially named COVID-19, is continuing to have impacts on global supply chains.  The logistics industry is very labour driven with limited automation in warehousing.  Due to the the travel restrictions in place, it is making it difficult for manufacturers to get employees back and bring production to pre Chinese new year levels. These travel restrictions are also effecting the trucks moving the goods and containers to port for export. Currently trucks are not permitted to cross from one province to another and cities are restricting which and when trucks can enter them. Complicating all of this is each city is creating its own set of rules to control entry and mange output. A truck operator may be able to collect goods from one city but unable to deliver them in another city. Ports such as Shanghai and Ningbo are particularly hard hit as the majority of shipments originate in a different province.

Several shipping lines have introduced additional blank sailings in the coming works. While shipping demand has dropped due to goods not getting to the ports, this will have the effect at the moment reducing capacity and keeping rates high. However if the COVID-19 gets worse and manufacturing continues to decline along with further movement restrictions within China then rates will begin to fall off. Currently the Dow Jones Transportation Average shows limited impact by the Coronavirus which means the markets are indicating that they feel the Coronavirus is under control and expect cases to begin to decline as the Authorities get control. However we at AJF are still very cautious about this and have first hand knowledge of the difficulties can shipments ready for export. It may be a few more weeks before the real effects of the manufacturing slowdown are fully felt.

We have been assisting some of our clients in sourcing new suppliers and manufactures from both Vietnam and India to help make their supply chains more resilient to the on going effects of the virus. Working with our agents in these countries we have found suppliers, arranged to inspect factories, ensure they comply with Western labour requirements and have the capacity to take on new clients. We have also arranged quality checks of the products to ensure they comply with the clients standards.