ECA

COVID-19 Impact to Freight

25.03.2020 NSW Trade and Investment

Generally positive news on China production and shipping but risks in pharmaceuticals and face masks.

1. Shipping Lines / Airfreight / Stevedores

  • COSCO and OOCL say there have been dramatic improvements in China, with ports now being able to discharge and load vessels, seeing more sailings being confirmed.
  • Maersk has confirmed 1 additional blank sailing for the 1st of April.
  • QANTAS Airways continues to slash passenger flights as people take precautions against travelling. International flights have been cut by 90 per cent.
  • Virgin airways will cancel all international travel from March 30 through to June. Domestic services have been cut by 50 per cent.
  • DPW Logistics Parks 1 and 2 are still high capacity (at 80 per cent), but are expecting evacuations to pick up over the coming ten days. Evacuations have been slow to date. They expect to be back to normal around Mid-April.
  • Tyne St Peters report they are not congested with COSCO, MSC and CMA all moving empties – however, there are continuing issues with second tier carriers.
  • ACFS PB say larger lines have been evacuating more than others, and while a corner has been turned, they are still relatively full. They are still accepting empty containers and expect more evacuations in the coming days.
  • RFNSW report Hutchison in the week of the 2/3 was observed to have had 20 containers on the dock, when it would normally have 500-1000.
  • Inside Business reports a survey of American Road Freight Operations has found 80 per cent have lost business because of the effects of coronavirus, although for the majority, the loss isn’t critical to their viability at this stage.
  • Hutchison has agreed to extend payment terms to the end of the financial year, providing cash flow relief.
  • OOCL reports similarly that many terminals and depots in China are returning back to normal operations. The reefer plug shortage issue in Shanghai, Tianjin and Ningbo has gradually improved, while more trucking services have resumed.
  • ANL say that manufacturing activities are gradually picking up, more port workers and truck drivers are returning to their posts, and cargo flow is easing up at the major coastal ports. ANL believes that business operations have now entered the recovery phase.

2. Customs Forwarders and Associations

  • Poseidon Freight Forwarders report shipments from China have begun filtering through.
  • Air Freight is now at a premium with the Federal Government (and airlines) placing on travel bans and cutting services.
  • Poseidon says Halloumi Cheese is still being moved from Cyprus – because even though Italy, Spain and France have been shut down, at this stage their ports remain open.
  • Poseidon says that South Africa has begun shutting their ports and borders.
  • Commercial Customs says China has recovered well. They hear factories are between 70%-100% subject to location & workers access.
  • China domestic transport is getting back to normal & ports are operating well.
  • Commercial Customs latest 30 day container volumes now exceed the container volumes from same period last year. Their concern now is they don’t have any delays or restrictions at Australian terminals regarding facilitation of container movements.
  • The CTAA says the coronavirus is now having an effect on business cash flow and is asking stevedores and container parks to seek payment terms relief. They are asking the three week terms be extended to three months.
  • Containerchain has told the CTAA that payment terms from March 1 will be extended from two to three weeks over the coming three months.

3. Supermarket Retailers

  • David Jones has seen its supplier based principally in china come back to relatively stable levels over recent weeks, but are experiencing a backlog. They are behind on our product receipts at this point in time, but slowly production is ramping up. David Jones has not experienced issues with sea freight movements, but airfreight has been particularly challenging, and will get worse following the travel announcements by the Federal Government. As such, they anticipate a requirement to eliminate all airfreight moving forward.
  • Consistent supermarket shortfalls are being blamed on on-going panic buying – with the ABC claiming it being the result of mixed messages and an unclear narrative from the Federal Government.
  • They say factories in the north are almost 100 per cent back to normal - around Shanghai it’s about 65-70 per cent and in the south around 60 per cent.
  • Most importantly, truck movements through China is back around 75 per cent, meaning they can get goods from factories to port again.
  • There are ships are coming online and Woolworths hasn't got an issue at present with booking ships.
  • Confirmed that imports were back on across the board including hand sanitisers and variety goods.
  • Where they’ve got an issue is with panic buying locally and trying to measure short to mid-term demand, but that applies mainly to domestic products.

4. Landside Road and Rail and IMTs

  • RFNSW reports road operators who base their business on IMEX container trade are down up to 85 percent – with companies who normally move 40-50 containers per week are down to just five movements.
  • SPL Minto supports this saying they only moved 5 containers in the first week of March and have asked their drivers to take all holidays.
  • SPL Minto is leading a push for Government to drop rego fees to help improve their cash flow situation.
  • RFNSW says to abandon payroll tax is what the industry needs to help stay afloat. They will be lobbying the NSW Government on this issue.
  • RFNSW says the industry is currently split with line haulage going “gangbusters” to keep up with local supply shortfalls caused by panic buying; while container carriers relying on the port are seeing very little work and are severely impacted. They expect a crash with line haul operators once panic buying recedes.
  • RFNSW doesn’t expect container traffic to be back at normal until end of April to mid-June.
  • DJ Global has put a 2 week lockdown on their offices preventing visitors to the site for two weeks.
  • Jim’s Containers report imports have come to a virtual stop with many regular customers not importing at all. However exports are keeping them going with a reduction of around 10 per cent.
  • HY Transport report business being very slow, but a large pick up in imports from Friday, through the weekend and into next week. They have mentioned Patrick has cancelled 5am and 1pm slots through this busy period, making it difficult for transport operators.
  • HY have been operating 6 of their 9 trucks over the past couple of weeks and rotating drivers to keep their staff employed (down around a third of capacity).
  • LINX reports their services between Enfield and the Port have been reduced by a half. They report they are struggling and desperate for a fast rebound from China.
  • IMTs report that there has been a small but significant amount of easing regarding capacity with empties being evacuated through the past week by shipping lines.
  • Crawfords report logging exports are currently down a third, with discharging in China continuing to be an issue for them. They are looking at the potential of India to take some of the slack.

5. Other items to watch

  • While pharmaceuticals are produced mainly in India and Europe, the Australian Pharmaceutical Association reported on the 4th of March that there were about 6-8 weeks’ worth of packaging supplies left.
  • On the 5th March the Australian Dental Association warned that dentists only have around 4-6 weeks of mask supplies and without them, they are unable to practice. Face masks are produced in Wuhan Province, China.
  • Kimberley Clark South Australia remains in 24 hour production to boost stocks of toilet rolls.
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