Seven of the world’s top ten container ports are based in China, and with many districts and provinces still waiting for local authorisation before businesses can re-open, thousands of industries are being affected, not least those involved in container-based transport.
The current situation on Air freight is that airlines are moving space continually, re-scheduling. As expected, cancellations are now well into March with some flights suspended until the end of April.
Blank sailings on Sea freight will also continue into March. Chinese Government port closures mean that full vessels cannot be unloaded or reloaded.
Hubei is the central hub for China’s Rail freight, and as the epicentre of the coronavirus outbreak, the effects of this are severe. But it is not a matter of running trains alone, the production of industrialised goods has stopped, and with lorry drivers not fully back to work cargo cannot be delivered to terminals or collected when arrives into the country.
The longer-term effect on supply chains
We are already feeling the impact on supply chains and this will be ongoing for several months. Adding to the current supply chain disruption, is the bottle neck with Brexit and the backlog from Chinese New Year celebration.
With such limited capacity on sea, air and rail freight in the foreseeable future, pricing will likely to increase.
Therefore, we recommend clients think about consolidating cargo. Companies will need to cooperate with each other throughout his period. As freight brokers our team can help with organising consolidated shipping, speak to one of the team.
We are also seeing change in production sites, where some customers are seeking alternative markets, or changing sourcing to other parts of China or even Korea and Vietnam. This can cost a little more and take a little longer. But if manufacturers in Europe cannot afford to wait for parts from China to finish a product, they will look for other sources.
If your supply chain is affected speak to us about Global routing solutions.
As a result of cancelled shipping, contract conditions are being examined in order to understand who might be accountable and whether insurance is in place to compensate.
Even where contracts have been concluded, the majority will include a force majeure or similar clause which will prevent the aggrieved party from recovering from the seller as the cause of the loss is outside the reasonable control of the seller. Cargo owners are likely to suffer the worst in this scenario as insurers generally seek to avoid any loss that doesn’t involve physical loss or damage, but this does not cover delay.
We’ve already been informed that some shipping lines are willing to exert force Majeure on many reefer containers due to insufficient power points at various ports.
At TPS Global Logistics we have protected space on both air and sea freight shipping lines so we can respond quickly to increased demand, and we anticipate surging demand towards Christmas (assuming the virus is contained).
So speak to one of the team on +44 (0)1622 237979 or email us firstname.lastname@example.org