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Coronavirus: Protecting your supply chain

In an attempt to restrict the spread of the Coronavirus, Chinese authorities have extended the lunar new year holiday until 2 February, with Shanghai and Ningbo having a further extension until 10 February, adding to the back-log of unshipped cargo held in factories across the country.

In the weeks following Chinese New Year, we would expect ocean freight rates to stay elevated and capacity tight.

The Coronavirus will exacerbate this already stretched situation, as the lines add the backlog of shipments that didn’t get moved before CNY to their normal volumes – a potentially massive increase.

To put this in perspective, if the factory shutdown is extended for a further week, the backlog will double, which will push sea freight rates up, resulting in delays and rollovers.

On the air side, British Airways has already suspended direct flights from the UK, while United Airlines and Air Canada have announced plans to reduce flight numbers.

Cathay Pacific is to reduce the capacity of passenger flights to and from China by 50%, but has confirmed that freighter operations will continue as scheduled.

While freighter capacity is welcome, the reduction in belly-hold air cargo capacity is a big issue and significantly reduces volume, at a time when many shippers will be seeking rapid transit.

We would advise shippers to expect more blanked sailings and the likelihood of increased freight rates, if factory closures result in significant backlogs of purchase orders and unshipped cargo.

Third-party operations like truckers, port operations and customs authorities will also be adversely affected, adding to any delays.

NOTE: Air and sea freight operations are already deteriorating and we are working hard with our local partners to keep our customers supply chains operating. If you have shipments pending in China, we would urge you to contact us without delay, so we can explore the best options to repatriate your cargo.

This is an evolving situation that we are monitoring closely and will update our advice, as developments occur. Visit our site or follow our social feeds to stay up to date.