A lot has occurred since our last newsletter in relation to Coronavirus. It’s even likely, that the situation has changed from the time of typing this, to the time you read it, such is the nature of this global matter.
We have had positive feedback from clients, whom have found these newsletters insightful and have shared them with their customers. So, we will continue to do them on an ad hoc basis. As we are all being presented with so much information daily, we do not want to contribute to the overload.
What we wish to focus on in this newsletter, is the ongoing impact and changes to importers and exporters.
Just as we thought China was coming back on line, the rest of the world has seen significant developments that will impact trade.
Below is a summary of situations we have experienced or heard of in recent times, that may or may not, have an impact on your business.
- 14 x day quarantine for all individuals (including) Australian’s arriving on our shores. What does this mean to importers?
- Airlines looking to cease operations into and out of Australia. Tonight we are hearing that SQ is possibly the only airline still quoting and accepting bookings ex CHINA.
- Air New Zealand today announced that they have stopped 85% of their network. We wait and watch what action Qantas will take, changes will be announced later this week, but to what level, we don’t know currently.
- Airfreight Rates, space & transit times
- All rates ex China are valid for a spot flight only, normally 3 – 5 x days away. With pricing on 16th MARCH in the range of USD7.50 - 8.50 per KG depending on the location / volume / destination
- Transit times are only available on NON direct flights. SQ seem to be one of the only airlines left (as of close of biz MON 16th MAR) offering services.
The average transit time ex CHINA currently, is 3 – 5 x days
- Air freight space ex CHINA is at a premium as Australian cargo is competing with space against cargo ex CHINA to all global destinations. For example with minimal direct flights ex HKG or CHINA into the USA all cargo is being pushed on to connecting services via other hubs, which your cargo is also on. Hence why the high price.
- Qantas has reduced international flights by 25% with further reductions in services to be announced by the end of this week, and have also downsized aircraft operating on international routes. So instead of having an A380 cargo hold, the aircraft type is only an A330 with significantly reduced space for cargo.
- Import vessel (VSL) schedules & VSL sizes. Many carriers have reduced VSL sizes to put pressure on space and aid their attempt to secure a PRICE increase in APRIL to help their bottom line no doubt. We are hearing that several services may be withdrawn completely over the coming weeks due to the anticipated low volumes on the back of the coronavirus and a potential global recession.
Some services have gone from 5500 TEU (20’) VSL down to 4000 TEU VSL. And instead of having two services a week only one.
So when you do the sums that is 11,000 TEU down to 4000 TEU only. A decrease of -63% space.
- Transit times – Carriers are offering transhipment options as replacement for direct services. Cliental on the eastern seaboard, whom have become all too familiar with the direct services and transit times, need to be aware that we do not anticipate those same options to be available over the coming months in certain situations. We suggest you allow for additional time in your supply chain for longer transit times.
- Export Space – last week, we endeavoured to book space ex MELBOURNE – QINGDAO and one carrier advised us the earliest available space was 5th MAY…. That’s right 5th MAY! We have secured the space with another carrier, but it’s an example of the disruption to services.
Other carriers are particularly full on USA and STH American cargo and are not accepting any bookings… crazy we know… but with limited services available space is at a premium.
- PIL (shipping line) has announced it is withdrawing from the USA – AU – USA trade. Those unfamiliar with this service, it was a direct LONG BEACH – SYD service. We expect it will push up pricing on direct services ex USA as one less competitor on the trade lane.
- Container equipment – many Importers / Exporters overlook the important part they play in the ongoing flow of container equipment globally. Many major ports around the world are running low on equipment as they have not had any regular imports for several weeks. This is putting a demand on equipment and carriers are starting to charge surcharges on certain global trade lanes, to minimise the impact on having to urgently re-locate containers.
Unfortunately, as you can see, there is not a lot of positives at the current time in the market. At Transways, we remain focused and ready to assist you and your business to the best of our ability in these very difficult times.
We thank you for your ongoing support and welcome any feedback or communication you may wish to share.