With acknowledgement to our peak industry body FTA (Freight & Trade Alliance), we share the following update regarding the impact of COVID-19 on supply chain operations:
- As of 16 June China is suffering the beginning of a second wave of COVID-19 with total case numbers have risen to 256 national wide. Beijing has two large local breakouts at moment, with 107 recorded cases in the last 72 hours. The Chinese government is currently trying to control spreading to other provinces and cities.
- On June 1, Chinese authorities released a master plan for the Hainan free trade port, which aims to build the southern island province into a globally-influential high-level free trade port by the middle of the century. A free trade port system focusing on trade and investment liberalization and facilitation will be “basically established” in Hainan by 2025 and become “more mature” by 2035.
- More and more Import & Export Fairs in China will be held online. The 127th China Import and Export Fair, popularly known as Canton Fair, kicked off online Monday June 15. This year’s online fair, which will last for 10 days, has attracted around 25,000 enterprises in 16 categories with 1.8 million products. The 102nd China Food and Drinks Fair will be held online from July 28 to 30 after a postponement due to COVID-19, according to the event’s organizing committee.
- China’s rail freight volume, an indicator of broad economic activity, rose 3.9 percent year-on-year in May, a sign of recovery from the COVID-19 shock after continuous efforts to contain the epidemic. During the January-May 2020 period, the railways transported a total of 1.39 billion tons of cargo, an increase of 2.7 percent from the same period last year. The China-Europe Freight train service launched 2020 is experiencing great support with 20 routes now linking Hefei, around 5 hours rail travel time from Shanghai, to countries including Netherlands, Germany, Poland, Finland and Russia.
- According to China Daily’s report, Over 95% of migrant workers (rural workers in urban areas) have resumed work. More than 26 million rural residents had arrived at workplaces, old and new, at the end of April. Meanwhile, another two million people wanting to leave villages across the country to earn more money work still looking for opportunities. The central authorities have expanded the coverage of State benefits and other relief packages to assist vulnerable families through these difficult times.
Whilst Fremantle was not seeing any impact to loaded import volumes during the first 3 months of the year as against east coast ports, in fact showing loaded imports higher than 2019. The month of May saw a 10% decrease, in TEUs, of loaded imports against May 2019.
In discussions with shipping lines, the commentary was that the downturn may have been due to businesses supplying from the east coast, using rail, and also the fact that orders may have been delayed / deferred due to uncertainty with consumer consumption and were not able to be shipped in time to meet the unexpected retail demand. This is supported by the fact that most lines have indicated steady / strong bookings moving into the next 6-8 weeks.
Whilst capacity is still being managed the trade lanes to Australia have not been as impacted as have the Asia – UK / USA trade lanes. There are still some blank sailings / service removal and smaller vessels and one can expect these may not change too much until a clearer view of increased / steady volumes can be guaranteed.