China’s ‘zero tolerance’ approach delivers PVG airfreight disruptions

Airfreight rates on the trans-Pacific and Asia to Europe trade lanes have already risen by 20% to 40% in August and are expected to head higher following new measures aimed at curbing a COVID-19 outbreak at Shanghai Pudong Airport (PVG) after two cases were reported this week. [caption id="attachment_66686" align="alignright" width="450"] Photo: Royal Media[/caption] The new restrictions in effect as of today are a continuation of what Freightos in Thursday’s market update called China’s “zero tolerance policy” toward outbreaks at the nation’s ports and airports, and are impacting cargo flights specifically, according to freight forwarders and airlines with operations at PVG. Cargo is still moving on passenger flights and on freighters operated by some carriers, but the cargo capacity reductions are expected to send rates soaring in the days ahead. Airlines with all-cargo flight cancellations include: Atlas Air, American Airlines, Air Canada, EVA Airways, Air China, Cathay Pacific, Ethiopian Airlines, Etihad Airways, Garuda Indonesia, Hainan Airlines, Air Hong Kong, Air New Zealand, Polar Air Cargo, Qatar Airways, Aeroflot, Saudia and WestJet, according to a COVID-19 advisory from freight forwarder Geodis today. American Airlines and Air Canada Cargo also confirmed the cancellations to Air Cargo World , while Cathay Pacific issued an advisory for freighter service disruption. Other carriers could not be immediately reached for comment. UPS, FedEx, China Eastern and China Southern are among carriers that have freighter departures from PVG scheduled within the next 24 hours, according to flight tracking software. China’s approach to isolating COVID-19 cases has siloed airport operations to enable stricter control over outbreaks, creating a situation whereby some combination carriers can haul cargo on passenger flights departing PVG, but not on cargo-only flights departing from a different section of the airport. “Pudong Airport adheres to the principle of strict separation of passenger and cargo operations, and the strict separation of domestic and international flights,” said a statement from Avinex, the Shanghai Airport Authority. Avinex confirmed the existence of two COVID-19 cases within the airport’s international cargo area, and the resulting disruption to the airport’s cargo operations. The airport did not provide an estimate for when its cargo operations might normalize, saying only that it was working to improve the situation. Although the airport’s largest cargo terminals, including the Eastern Air Logistics/China Cargo Airlines facility, and PACTL facilities remain open, productivity will remain “largely constrained” according to a bulletin from forwarder GEODIS. Additionally, cargo handover between forwarders and carriers at PVG has “mostly stopped” while forwarders wait for more clarity on when flights will resume as scheduled. “The ongoing rotation of handling personnel, additional COVID cases and an overall shortage of staff have led to a cascading effect on freight operations,” said Jan Kleine-Lasthues, global chief operating officer, air freight, of Hellmann Worldwide Logistics, in a note to customers. With flight cancellations and suspended block space agreements (BSAs) a “volatile rate market” is expected to develop over the weekend or early next week, said Kleine-Lasthues. Airfreight rates ex-PVG to North America stood at their 2021 high during the week of May 3, according to the TAC Index, then declined through June. Since August began, however, rates have remained above $7/kg and for the week of Aug. 16 climbed to $7.80/kg, the highest level since the week of May 24. Updated rate information from PVG is not yet available, but freight forwarders are preparing for an increase in the wake of the cancellations. “The situation is changing daily but expect that the rates for any available capacity will increase up to at least $15/KG very soon, seeing rates higher is not unlikely,” Shaｗn Richard, VP Global Airfreight of SEKO Logistics told Air Cargo World . It is unclear how long the new restrictions will remain in place at PVG; some carriers, including Cathay Pacific, expect to issue a new update early next week. However, the existing COVID safety procedures have already created “a large backlog of inbound cargo” at PVG, according to Geodis’ update, with delays in cargo distribution ranging from two to three and five to seven days. Any additional disruptions are likely to build upon the existing delays at PVG, as Matt Castle, vice president of air freight products and services at C.H. Robinson, recently told Air Cargo World . “We saw here just in the last few weeks with the number of COVID cases in Nanjing (NKG), China, effectively shutting NKG down for a 10-to-12-day period,” Castle said. While trucking within China can mitigate some of the effects of an airport closure, quarantine concerns limit trucking in impacted regions, he added, because “drivers don't want to go into the area or can't go into the area, because then they're forced to quarantine when they come back out.” “What ends up being a week of congestion has this tail that lasts three or four months,” Castle added. In 2019, PVG Airport was the third-largest cargo airport measured by tonnage with a handle of 3.6 million tonnes, according to Air Cargo World’s ranking of the Top 50 Cargo Airports .

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China’s ‘zero tolerance’ approach delivers PVG airfreight disruptions

China’s ‘zero tolerance’ approach delivers PVG airfreight disruptions

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