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China Air Cargo Operations Heavily Disrupted

On Friday 20th August, new local cases of COVID-19 were reported at Shanghai Pudong International Airport. Pactl terminal was closed as a result, with around one third of flights out of PVG airport affected, most of which were cancelled.

It is reported that EAL terminal and Shanghai Airline terminal III are both operating well at present. Various carriers (such as JL, EK, SQ, BR, CI, TK, etc.) are still flying as normal.

In recent days, due to increasing cases of the contagious Delta variant of COVID-19 in China, new lockdowns and stricter quarantine measures have been introduced. This has impacted cargo operations at both airports and seaports.

Air cargo operations have been most severely affected, with Beijing, Shanghai Pudong (pre-closure) and Xiamen Airport operating at 43%, 33% and 66% capacity respectively.

In addition to equipment shortages, there has been a surge in resignations from ground handling staff following the introduction of strict quarantine rules. At Shanghai Pudong, for example, staff have been asked to work for seven days, quarantine in a hotel for seven days and then quarantine at home for a further seven days.

As a result of staff quitting, long handling times (2-3 times longer than normal) have been recorded and some cargo flights have taken off with very little or no cargo over the weekend. This has, in turn, created a backlog for upcoming flights.

Meanwhile, airlines are also dealing with crew quarantine rules. Long delays have resulted in cancellations or empty returning flights. China Southern and China Eastern have announced a significant number of cancellations in major US schedules until the end of August, placing further pressure on trade lanes from mainland China.

An increase in air traffic ex-Hong Kong and Incheon is expected, with some cargo flights already having been diverted to Hong Kong.

Rates from China are rising, and with news of today’s closure we expect this trend to continue. Prices to the US have increased by $1.5-$3 per kg, while rates to Europe have gone up by $0.7-$1.5 per kg.

Volume has returned to pre-pandemic levels, however the industry is still facing considerably reduced capacity. The supply and demand imbalance continues to grow, with some warning that rates in the open market may reach extraordinary levels.

At Ligentia, we are operating alternative services to provide additional capacity and reliable transit times. Please get in touch for more information.

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