Date : 9 Mar 2020
Dear esteemed partners,
Further to the update I sent in Feb 2020, I would like to give you latest news here :
Latest situation about coronavirus in China :
- There are different policies adopted by the central and local governments at different provinces and everyone is trying their best to contain the virus;
- Some roads of some provinces are still blocked by the government and not all villagers from remote areas can commune back to Canton and other cities to work, many factories are not at its 100% capacity yet.
- For companies that are resumed to work, the work force may not be in full as there is policy for those who are from remote areas in China, they have to quarantine themselves from 7 to 14 days and so, many people are still at an “isolated” stage and they cannot be at work, in person at the office.
- If a company is recruited with more local people, the company may function more or less like normal but if one company is with more labours / workers from remote area, the service will get impacted still.
- More and more Chinese people are aware of the conrona virus and most people are very cautious in personal hygiene to reduce the exposure to possible infection and there is speculation that situation should get a lot improved in the coming weeks.
Current situation about coronavirus in Hong Kong :
- There is policy in place that for any person who travelled to mainland China and if they
need to enter into the HK territory, they have to get quarantined at home for 14 days.
- Most people can commune to work in HK but there are many measures in place at office
buildings and offices in terms of sanitization and to cut off the possible chain of infection
- Some business will not operate in full service like banks and entertainment venues to
minimize the chance of people’s interaction.
Direct impact to Ocean and Air Freight :
Ocean freight :
- Demand of containers is less than the same time last year as most factories are not in operation due to the quarantine Policy that many labours cannot be back to duty yet and many shipments get delayed as production needs to be postponed inevitably. Production starts to get improved in March as some labours will be free from quarantine period of 14 days. However, many manufacturers speculate that they can be back at full capacity only in late March.
- Normally, there is increase in ocean freight cost or some other charges like EFS, PSS, etc.. starting early April but due to the low demand of containers at this moment and the uncertainty of production at full power, it will be too early to comment whether there will be additional charge to be imposed as it will be decided by the “demand and supply” later. There are rumors in the market that there will be new surcharge related to this virus but so far, this is just a rumor and there is no need to get into panic.
- Though there is not much demand of container space as last year the same period, to keep the business and price in a stable level, liners may cut some regular vessels to create a feeling that demand will be over supply. Freight rate may not drop as a result even the demand is not strong.
Air Freight :
- Demand seems to be going up lately and the rate becomes rocket high.
- Demand is up but it seems that there are not as many planes available as before and the leadtime to get uplift may take longer than before, in general.
- For cargo from China to overseas, not only cargo or chartered flights will be used before but also, passengers’ flights. Yet, with the virus issue, passengers’ flight is cut on a large scale and in turn, there is less flight for carrying merchandise and it drives the air freight cost up.
- From China to Asia, cargo is mostly carries by passengers’ flight but lately, there is huge reduction in flight schedule for this category that freight is driven up from 6 to 10 times from conventional price.
- Most of the factories will resume 100% productivity in late March or Early April, we anticipate that there will be another uptrend in price and demand in air freight as there will be a lot of urgent goods to be sent out.
With this said, due to our extremely good relationships with liners and major air freight players, we are giving best service and delivery schedule and we are proud to say that you are assured to have 100% satisfaction working with us!
Should we have any further update, we may keep you posted shortly!
Excel Network Limited