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WHO: China’s Zero-Covid Policy is Not Realistic

WHO: China’s Zero-Covid Policy is Not Realistic

Omicron Variant Causing New Challenges for China’s Zero-Covid Policy

china shanghai beijing zero covidOver the past two years, the world has alternatively applauded and criticized China for its approach to handling the coronavirus pandemic. During the peak of the outbreak, 960 million people were living under some form of lockdown when China first instituted their “zero-COVID” policy. The tough regulations were viewed as a success when restrictions were lifted after five months in May 2020. Individual cases were met with swift action, including shutting down Shanghai Disneyland for two days last November after a single guest tested positive for COVID-19. However, as Shanghai approaches two full months of a strict lockdown in the spring of 2022, it is becoming increasingly clear a zero-COVID policy is unsustainable with the Omicron variant. 

Tedros Adhanom Ghebreysus, the Director-General of the World Health Organization, noted during remarks last Tuesday that the virus is drastically different from the original variant identified in Wuhan. “We know the virus better and we have better tools, including vaccines, so that’s why the handling of the virus should actually be different from what we used to do at the start of the pandemic.” Predicting the animus from China following his comments, Tedros added, “regarding their choice of policies, it is up to every country to make that choice.”

Global Balancing Act to Curb Omicron Transmission

Other members of the WHO have echoed support for Tedros’ comments. WHO Emergencies Director Michael Ryan recommended China reconsider its approach to curbing the virus and any measures to combat the spread must show “due respect to individual and human rights”. The WHO has acknowledged extinguishing COVID-19 worldwide is impossible. At the current moment, the focus is on lowering transmission and lessening the impact on society and the economy. “That’s not always an easy calibration,” continued Ryan. 

President Xi of China has doubled down on the zero-COVID policy. The Chinese government has made it clear any critics will be punished.

WHO Chief Censored in China

China’s displeasure with the comments from the head of the WHO is apparent. Both the criticism of the zero-COVID policy and Tedros himself have been censored on popular Chinese social media sites Weibo and WeChat

This comes as a surprising turn of events. The United States had initially criticized Tedros for his support of China’s extreme response to COVID-19. Then president Donald Trump went as far as to initiate the process of withdrawing the United States from the WHO. This decision was reversed by President Biden upon assuming the office. The United States has historically been the largest funder of the WHO.

tedros director who world health organization president xi jinping china chinese coronavirus international freight forwarding

BEIJING, CHINA – JANUARY 28: Tedros Adhanom, Director General of the World Health Organization, (L) attends a meeting with Chinese President Xi Jinping at the Great Hall of the People, on January 28, 2020 in Beijing, China. (Photo by Naohiko Hatta – Pool/Getty Images)

Economic Fallout from China’s Zero-Covid Policy

Shanghai, China’s most populous city, is slowly making its way out of lockdown. Some shopping malls and markets have reopened. The next step is public transportation resuming operation for limited hours. There are several hundred cases being reported each day. However, this is significantly less than the tens of thousands reported during the peak of the outbreak.

Even if the Chinese government were to lift their domestic zero-COVID policy, the international forecast is not so good. Overseas travel, including freight forwarding, would likely remain severely hampered. The lack of a mass-vaccination program and drop-of-the hat lockdowns following Omicron-related cases has many companies reconsidering their presence in China.


How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art software bringing you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control. We offer efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Shanghai Lockdown Squeezes Supply Chain

China’s Stringent Zero Covid Policy Strikes a Barely Recovered Supply Chain

The supply chain continues to limp along on its Sisyphean struggle back to normal. An outbreak of Covid-19 cases tied to the Omicron variant have caused China to take drastic measures and issue a near total shutdown of Shanghai, one of the world’s most populous cities.

The Shanghai lockdown is notable for several reasons, not the least of which it is the largest lockdown in China since Wuhan, widely believed to be the origin of the Covid-19 pandemic. As of Sunday, March 27th, there were roughly 6,000 cases reported in all of China, with about half of the confirmed cases in Shanghai. This number may seem infinitesimally low compared to other countries, but China has adopted a “Zero Covid” policy for the majority of the pandemic and an outbreak, even of this size, is a major cause for concern for the government.

shanghai ningbo hong kong beijing port lockdown supply chain bottleneck freight forwarding international shipping

Photo courtesy of Pat Whelen.

Effects on Freight Forwarding

Numerous financial services headquartered in the city and the Shanghai Stock Exchange have shifted as many services as possible online. Local restaurants (such as international chains: McDonald’s, Pizza Hut and KFC) have shuttered their doors. Factories and shopping malls are closing for the time being, as well, with any workers who can work remotely being encouraged to do so. Unfortunately, Shanghai’s port, the largest port in the world, does not have that option. Even still, the plan is to maintain operations under the “essential services” label.

While the Shanghai port will still be open, freight forwarders are being encouraged to use alternate ports due to trucking issues and other restrictions in the city. The Shanghai airport is still operating at a normal level, but that could change if more cases are found and the lockdown is extended past April 5th. It is advisable at this moment to prepare for worst case scenarios. 

The capital city of Beijing is experiencing trucking delays due to its own set of restrictions; elsewhere, the Hong Kong border provides a different set of issues. The Ningbo terminal, which has previously experienced pandemic-related disruptions in service, is a recommended alternative until the lockdown in Shanghai is lifted.

Details of the Shanghai Lockdown

China is taking extraordinary steps with the Shanghai lockdown. The current plan is to shutdown the city in two halves; east of the Huangpu River will completely shut down except for essential services for four days, then the side west of the river will do the same. The east side of the city is mostly the business district and the west is more residential. Certain financial institutions called employees to their offices before the lockdown went into effect so they could sleep at the office for the duration of the lockdown. The hope is this split lockdown will isolate any cases of Covid-19 without completely disrupting the local, national and international economy.

shanghai port tesla plant huangpu shutdown lockdown residents coronavirus omicron automotive computer shenzenDuring this time, Shanghai is taking on the extensive task of testing every single person who calls Shanghai home—for those of you doing quick math, that’s over 3 million tests per day for the 25 million people who call the city home.

Continued Impacts on the Automotive Industry

The automotive industry continues to be one of the hardest hit by the coronavirus pandemic. Tesla has announced a pause in production in their Shanghai plant until at least Thursday, March 31st. Incidentally, CEO Elon Musk announced he had tested positive for Covid-19. All of this comes at a time when Tesla stock prices are, against all odds, skyrocketing amongst rumors of a potential stock split.

Despite delays in the supply chain and rises in gas prices, forecasters remain bullish. However, these new lockdowns in China and the war in Ukraine are squeezing the supply chain about as thin as it can possibly go. US auto sales are slumping, with finger pointing at chip shortages, inventory size and other possible culprits. The reality is less affluent buyers are being kept out of the automotive market. Car sales are expected to fall 24% in March and 16% in the first quarter. Until the lockdowns are lifted and bottlenecks clear, inventories will continue to shrink and prices will continue to rise.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Inflation Rising from All Corners of the Globe

Covid Outbreaks in China, War in Russia

As the two year mark since the first coronavirus lockdowns approaches, life in the United States is close to resembling a pre-pandemic world—at least on the surface. While mask mandates are being lifted and the rate of new cases is the lowest since March 2020, the supply chain is still struggling under the pressure of inflation and gas prices at all-time highs. The Federal Reserve has indicated they intend to raise interest rates to curb inflation, but factors from international partners have massive complications.

The global economy is bracing for a two-front fight between Russia’s assault on the Ukraine and new lockdown measures in China. How much these events will affect cargo movement around the world is dependent on high-stakes diplomacy and the efficacy of medical care.

china shenzhen lockdown coronavirus omicon spike essential employees shipping logistics

Photo courtesy of Lysander Yuen via Unsplash.

Inflation from Chinese Lockdowns

Currently, China is dealing with its largest outbreak of coronavirus cases since the initial explosion in Wuhan. Mainly driven by the Omicron variant, infections have increased from a few dozen per day to over 5,000 on Tuesday, March 15th. These numbers may seem small compared to other countries, but the speed at which rates are rising and China’s strict zero-Covid policy is causing alarm.

In response to the new cases, over 37 million people in China are under lockdown. All non-essential workers are required to stay home in certain cities. This is leading to a complete shuttering of factories that produce semiconductor chips, computers and more. It is unclear how long the lockdowns will last, but it will be one week, at least. SEKO Logistics, a shipping company based in Shenzhen, revealed in a press release they “have not yet been advised of any official restrictions to Yantian Port [in Shenzhen],” but “no cargo will be able to load in Yantian from next week and vessels most likely will omit the port.” 

With demand still high for all types of consumer goods, any delays lead to negative long term effects; as was evident last summer with the shutdown of the Meidong Terminal in Ningbo.

Inflation from Russian Sanctions

For many Americans, the most acute economic pain over the last month has been felt at the gas pump. The sharp rise in fuel prices stems from the powerful sanctions levied at Russia over their incursion into Ukraine. 

russian ukraine opec ocean gas crisis diesel inflation

Photo courtesy of Emmaus Studio via Unsplash.

Although only a small percentage of American oil comes from Russia, the sanctions have had a far-reaching effect in a global market. The average price of crude has jumped, due to Europe looking for fuel sources other than Russia. This comes at a time when oil production was significantly down—barrels of oil traded at a negative price point during the worst of the coronavirus stay at home orders. It will take time for supply and demand to stabilize after several rocky years.

“Everything that you have touches a truck,” said Cherri Harris, the CEO of Swint Logistics Group. With prices of diesel fuel over $5 per gallon, a single truck can spend more than $500 per day solely on fuel. The price increase is eating into profits and that cost is eventually passed onto the consumer. 

Looking Ahead

This is an incredibly complex time for the global economy. Budgets and plans that have been in place for months have to shift at a moment’s notice. Even the Fed is reconsidering its timing to raise interest rates.

In China, the hope is an incredibly stringent lockdown will minimize the economic fallout for a new spike in cases. Optimistic predictions from the Chinese government give the impression they expect the lockdown to be lifted before the end of the month. 

On the other hand, sanctions on Russian oil will likely last until they withdraw from Ukraine. There is only one person who can call Russian troops home and they seem impervious to international pressure, at least for the moment. Meanwhile, oil companies look elsewhere to make up the difference from the lack of Russian oil. Chevron, for example, has made it clear they are willing to work with Venezuela instead of Russia, if the Biden Administration lifts sanctions on the South American nation. Republicans highly critical of Venezuela put Biden in a precarious place politically as he attempts to work down gas prices creating a stalemate for the foreseeable future.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Border Protests at the US-Canada Border Torpedo Supply Chain

Auto Industry Losing Millions of Dollars Weekly

With new cases of the Omicron variant beginning to lessen, there were hopes by many life might slowly return back to a pre-pandemic state. February is a month that traditionally feels the brunt of a tightened supply chain due to Lunar New Year celebrations, but this year the strain on the supply chain is coming from border protests on the North American continent.

Three border crossings have been closed or affected by a group of Canadian truckers who are protesting Covid mitigation measures. Thousands of truckers have joined forces to fight a mandate that all Canadian truckers must be fully vaccinated or quarantine in their homes for two weeks after crossing the US-Canada border. The protests have been declared unlawful by police, but for the majority of the protests practically zero arrests have been made.

border crossing us canada trucker protest vaccine exemption mandate

What Caused the Border Protests?

The so-called “Freedom Convoy” began in the western Canadian provinces with the goal of driving to the Canadian legislative capital, Ottawa, and remaining there until the mandate was lifted. Previously, truckers had been exempt from any form of vaccine mandate in an effort to keep the supply chain operational during the height of the pandemic. Since arriving in Ottawa, the truckers and other like-minded protesters have effectively shut down the city. There were rumors that similar protests might occur in Los Angeles, who hosted Super Bowl LVI on Sunday, February 13th.

The protest has spread from the capital to border crossings in multiple Canadian provinces, crippling the trade of goods between the United States and Canada. The Ambassador Bridge, which carries over one quarter of all trade between the two countries has attracted the most attention from protesters and media, alike.

Who Is Most Affected?

For the moment, the people feeling the brunt force of the protests are autoworkers at factories in Michigan, Kentucky and Ontario, Canada. Due to a lack of materials, employees’ hours have been cut back. Economists estimate that workers in Michigan, alone, lost $51 million dollars during the week of February 7th to February 13th. Factories typically keep two weeks worth of supplies on hand, but if the bridges remain closed much longer, “then you’re looking at layoffs,” says Carla Bailo, the president of the Center for Automotive Research in Ann Arbor, Michigan. This loss of wages extends throughout the entire community, with people spending less money on food and entertainment while their hours are curtailed. It is a stark reminder of how precarious the global supply chain can be.

Additionally, the communities of Detroit and Windsor, Canada, where the Ambassador Bridge is located, are acutely feeling the pressure of the protests. The required police presence at the border protests, while leading to few arrests, has led to an increase in 911 response times for the rest of the cities. Additionally, in Ottawa, the epicenter of vaccine protests, the downtown area has been in a state of deadlock for several weeks. Businesses are closed simply because it is impossible to get to their doors due to the immense crowds.

The recent lack of steel and aluminum from Canada compounds upon the shortage of semi-conductors to drive up the value of both new and used vehicles. After announcing their earnings report for Q4 2021, Ford stocks fell 6%. However, Ford reported profits of over $10 billion dollars in 2021 and remains “bullish” on 2022.

border crossing ottawa protests canada windsor detroit truckers pedestrians auto industry supply chain

When Will the Border Protests End?

On Sunday morning, February 13th, following an injunction from a Canadian judge that entered in to effect on Friday evening, police began to arrest the truckers blockading the border crossings. While tow trucks removed vehicles, hundreds of pedestrian protesters remained. The road from Detroit into Windsor was partially re-opened, but it will take some time for auto plants on both sides of the border to rev back up to full production.

It is difficult to say when the borders will become fully operational, but goods are making their way, slowly, across the border. Prime Minister Trudeau, for the first time, invoked the Emergencies Act on Monday, February 14th, which gives the government more power to suspend citizens’ right to free movement and prevent financial support of the protests. However, the vaccine mandate was not repealed and after seeing the success of their initial protest it is likely there will be subsequent blockades in the coming days.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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Port Congestion Expected to Continue Into the New Year

High Consumer Demand Prolongs U.S. Port Congestion

Already high consumer demand is growing, causing imports from Asia to continue congesting U.S. ports. Imports are forecast to remain elevated into February and push even higher in the second quarter of 2022.

2022 to Bring an Early Peak Season for Imports

U.S. ports have been struggling with congestion all year, and this is expected to continue into the new year. The annual Lunar New Year lull is typically a period of time that allows any backlogged cargo to be cleared up, but 2022’s “lull” is only expected to last for a matter of weeks in February. LA port chief Gene Seroka also believes 2022 will bring an earlier than usual peak season. This fall, retailers described record-breaking peak season volumes, and are now working to rush ship their products to the U.S. before factories in Asia close on February 1st for Lunar New Year celebrations.

port congestion lunar new year los angeles long beach ports chinese shipping containers delay

Photo courtesy of Tran Huy.

For the past few months, big-box retailers have pushed back their restocks in order to focus on importing holiday merchandise. U.S. imports are expected to increase 4.6% in December, 9% in January, and 7.3% in February. By March and into April, these percentages are expected to drop. Retailers in the second quarter will only have a few months before the rush to restock begins again with back-to-school products.

Trans-Pacific vessel capacity will be tight into 2023, causing retailers to begin shipping their peak season merchandise earlier than usual in the late spring of 2022. Warnings of a second port congestion issue were released last week, but congestion issues will only truly be resolved if imports from Asia slow down considerably. Based on recent consumer demand trends, a slowdown is not likely any time soon.

Above Average Container Dwell Time Contributes to Congestion Issues

port congestion los angeles long beach united states international freight forwarding lunar new year imports

Photo courtesy of John Simmons.

Los Angeles and Long Beach ports have experienced the worst U.S. port congestion. These two ports handle 50% of all U.S. imports from Asia, and the amount of imports these ports receive continues to increase. Large numbers of empty containers left at terminals and long-dwelling import containers are contributing to congestion issues, as well as warehouse congestion. The average dwell time for these containers is above 10 days, which is more than double the normal dwell time of 4 days or less.

Despite the LA port shipping back 43% more empty containers to Asia than this time last year, empty containers remain an issue. Carriers are being asked to return their containers to Asia by sending sweeper ships, whose purpose is to take empties away in bulk.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

To learn more about managed transportation with SiShips, or to view a demo of our software, contact us today.

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How Imports Have Been Impacted by COVID-19 in 2020

Understanding How the Pandemic Has Affected Freight Forwarding This Year and Anticipating Future Changes

It’s no surprise that the COVID-19 pandemic has significantly impacted the global supply chain. From transportation to manufacturing to distribution and retail, all industries have experienced new challenges this year – challenges that will likely continue through at least Chinese New Year. To help you understand the factors that may impact your shipment, we’ve broken down how COVID-19 has affected shipping logistics this year so far.

Changes to Production and Demand

As COVID-19 spread around the world, international lockdowns halted production and slowed global economies in an unprecedented way. From April through June, global volumes came to a standstill. The limited products available for shipping experienced slowed journeys as cargo was stopped at origin or destination ports for various quarantining procedures.

By July, however, China had returned to full production, boosting availability and, subsequently, demand. This demand has not slowed: w=While September and October always see large order volumes from China as retailers prepare for the holidays, American imports from the Asia Pacific were 23.7% higher in October of this year than last year, and 10% higher than the month prior.

Globally, output increased in 22 of 26 subsectors in October, with automobiles and parts, banks, chemicals, and machinery and equipment representing the top performers.

Impacts of COVID-19 on Transportation

COVID-19 Impact on Shipping

Sluggish demand in the spring forced ocean carriers to blank sailings to cut losses, while reduced air traffic significantly reduced capacity in the skies as well. However, as sales picked up exponentially, carriers found themselves faced with the opposite problem: A surge of demand outweighing available cargo space.

Workforce shortages and various quarantine regulations slowed the devanning process, lengthening container churn from 1-2 days to 5-7 days. Despite carriers shortening container free time and increasing demurrage and detention charges, this reduced pace still created a build-up on the supply chain. Further fueling the imbalance, carriers struggled to get their equipment back to the origin ports where it was needed.

At the ports, the trucking industry was also impacted by surging volumes. Long lines and road congestion significantly lengthened the time needed to get containers out of and back to ports, generating a chassis shortage and slowing transport times. Able to move fewer containers than normal, trucking companies struggled to cover their costs.

Adjustments to Rates

Motivated by high export rates from Asia, carriers reduced the number of full containers available on the back-haul voyage to China, forcing customers to book more LCL in place of FCL shipments. This has further impacted the capacity shortage, driving up the cost of additional space. Likewise, lack of space on vessels forced cargo owners to pay a premium in spite of FCL contracts.

With all of these factors, shipping rates around the world have significantly increased. From Asia Pacific ports to Los Angeles, many rates doubled. From China to Europe, they tripled, with some containers moving at a rate of more than $8,500 per 40’. Even the typically stable Intra-Asia lanes experienced heavy rate increases.

How SiShips Can Help

We know there are a lot of changes impacting the freight forwarding industry right now. We’re here to help you stay on top of new rates, deadlines, and more, so you can be confident you’re always receiving the best option available for your business.

To learn more about SiShips, or to view a demo of our software, contact us today.

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Ocean Cargo Rates Peak as Demand Surges

Covid-19, Limited Capacity, and More Factors Have Driven Freight Rates to Set New Records

Although back-to-school season and holiday preparations consistently make August a peak season for ocean freight, this year is seeing a uniquely high increase – in both rates and capacity. The blanking of sailings earlier in the summer in response to the Covid-19 pandemic, combined with concerns over tariffs as the first trade agreement with China nears expiration, has generated a boom in demand that outpaces capacity. As a result, Asia-US West Coast spot rates have set new records, with Shanghai to US West Coast routes seeing a 167 percent increase from 2019.

Further, analysts are predicting another General Rate Increase (GRI) for trans-Pacific ocean cargo routes this month, marking the fifth since June 1. While earlier in the summer, increased rates were driven by significant numbers of blank sailings (a response to reduced exports from Asia due to Covid-19), these new GRIs are built on a surge of demand as inbound volume sees a year-over-year increase. We explored the factors at play in this increase, as well as potential future events that may impact rates further.

Spot Rates Increase Ocean Cargo

Capacity Versus Demand

Since the start of the year, capacity and demand have been drastically fluctuating. The onset of Covid-19 meant a sudden halt of economies, starting in China and Asia. With fewer imports – and lower consumer demand – carriers cut capacity radically, with 19 percent of total sailings blanked in May and 15 percent in June.

This summer, economies began to move again and US imports from Asia rose by more than 20 percent between June and July. In particular, a significant consumer demand for items like fitness equipment, at-home activities, and furniture, as well as the consistent demand for PPE, drove retailers to increase their imports to satisfy demand. Now, with only 3 West Coast sailings blanked for August and September, capacity is nearly back to normal – yet need for space is outpacing it. To combat this, carriers have added additional sailings from Asia, or “extra-loaders,” with 10 scheduled for August and an extra 5 for September; however, these additional sailings haven’t been enough to eliminate the capacity crunch, maintaining increased spot rates.

External Factors at Play

Beyond Covid-19, additional factors are also at play. Uncertainty surrounding the US-China trade deal has driven importers to bring their goods over from China earlier than normal, hoping to avoid the potential of a large tariff increase. Likewise, as the American election looms, importers and carriers alike are doing their best to anticipate potential shifts in the market.

Seasonal trends have also shifted – consumers are prioritizing furnishings and other goods for at-home use outside of their typical peak seasons and forgoing traditional purchases for this time of year like back-to-school gear or Halloween items.

 

We understand that tracking rates can be difficult. With years of experience in freight forwarding, we build our software SiShips. With this program, you can ensure your business is always receiving the best rate available – and get access to seamless cargo tracking, instant quotes, and more.

Contact us today to learn more about how SiShips can help streamline your import and export experience.

 

 

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COVID-19 Pandemic Continues to Affect Ocean Cargo Capacity

Blank Sailings and Fluctuating Demand Complicate Ocean Freight Forwarding

Lack of demand for ocean freight due to the COVID-19 pandemic has resulted in an increase in blank, or canceled, sailings of cargo ships. Though the number of cancellations peaked in February, major shipping companies are still reducing market capacity in an attempt to maintain freight rates. As carriers and shippers aim to strike a balance between fluctuating demand and capacity, it is more important than ever to be aware of the shifts in ocean freight availability and the impact it might have on your business.

blank sailings covid-19

Blank Sailings Increase in Q2

According to data from Drewry, May saw a total of 85 blank sailings out of 457 scheduled sailings, or a cancellation rate of 18.6 percent. For June, this rate decreases to 13 percent, with 58 of a planned 461 sailings have been canceled. Transpacific trade routes have experienced the greatest capacity reduction, with 47 percent sailings blanked.

Positively, cancellations have decreased month/month and the trend is expected to continue into July. However, Danish shipping company Maersk, part of the 2M Alliance, has still announced that it anticipates blanking more than 100 sailings within the upcoming third quarter. Its shares decreased by 6 percent mid-May as a reaction. 2M saw the second-highest number of suspended sailings in June at 34 percent, closely following THE Alliance’s 40 percent.

An Increase in Ocean Freight Demand

Frustrations with lack of airfreight capacity and high rates have been driving shippers to turn to the ocean, at least for a portion of their freight’s journey. “When rates go up, sea-air becomes a viable alternative for cargo that cannot pay high airfreight rates, nor accept all-ocean transit times,” Morten Bach, global chief commercial officer for Shipco, told FreightWaves.

As shippers adapt to account for available capacity, ocean freight demand is increasing. The American Journal of Transportation attributes this surge to the growth of eCommerce, as well as moves to distribute PPE via ocean to relieve shortages. Combined with a greater number of blank sailings, this has generated an uptick in freight rates. The last week of May saw prices jump by 12 percent.

Managing Ocean Freight with SiShips

Supported by a downward cancellation trend, predictions for July show that container-ship carriers are likely to offer more sailings in July. However, despite signs that industry may be starting to resume, industry experts are remaining realistic about the likelihood of a peak season in 2020. The upcoming back-to-school months should bring about a surge of demand, but most think this is unlikely. “There is concern for the ocean shipping industry that a peak season may not materialize at all this year,” Rachel Shames, director of pricing and procurement at CV International, said in an interview with Furniture/Today.

Without an increase in demand spurred on by a peak season, carriers will need to be cautious about continuing to maintain their rates. As a result, it’s likely that blanking will continue well into Q3.

With many factors influencing ocean freight, importing can quickly grow confusing. SiShips, designed with our years of customs and freight forwarding expertise, can help manage variable rates and shipping options. Plus, you can track your shipment every step of the way, offering transparency and peace of mind.

To learn more about how SiShips can save you time and streamline your shipping experience, contact us today.

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COVID-19 Reduces Passenger Flights, Air Cargo Space

Airlines Adapt to Maintain Supply Chains Despite Decreased Airfreight Capacity

As the COVID-19 pandemic and subsequent quarantine orders reduce the number of passenger flights, air cargo space has been severely limited. Decrease in airfreight volume and supply has also generated a significant rise in rates, further complicating the importation of goods. This situation, along with the continued demand for PPE, medical supplies, and other essential goods, has required airlines to adapt, reconfiguring passenger planes for the transportation of cargo in an attempt to maintain supply chains.

A Sharp Decrease in Air Traffic

air cargo covid-19

While passenger planes typically carry cargo strictly in their cargo holds, the reduction in flights has limited transportable volumes. Even though some planes are still flying – often with just a handful of passengers – the drastic decrease in demand has forced a cut in flight offerings. In the final week of March, commercial air traffic was 55 percent lower than in 2019. Total air traffic has seen a 60 percent global reduction. Though planes are still in the air, they are primarily flying domestic routes, not international ones. In the United States, there were 72 percent fewer scheduled international flights in the first week of April as compared to 2019.

The Effects on Airfreight

As a result, airfreight traffic has fallen; the volume decreased by 10 percent in February and is predicted to fall by a total of 15-20 percent for the year, according to the International Air Transport Association. This was heavily influenced by the grounding of flights to China and the country’s shut down of factories earlier in 2020.

However, despite a 1.9 percent decrease in airfreight volume in February, freight capacity likewise fell by 4.4 percent, forcing a shortage of space. With a lack of available capacity, freight rates are increasing. These rates are particularly volatile between North America and Europe, given the previous reliance on passenger planes for these routes specifically. Industry experts suggest costs have increased by 4 or 5 times.

Passenger Planes Reconfigured for Cargo

Increased demand for personal protective equipment has forced airlines to find creative solutions to maintain the supply chain. In an attempt to provide more space, passenger planes are being converted to cargo planes. Air-safety regulators have reduced restrictions, allowing the cargo to be held in the cabin as well as in the belly of the aircraft for more efficient flights. Air Canada has scheduled 20 all-cargo flights per week using reconfigured Boeing 777s. Delta and United Airlines, among others, are also operating freight-only charters, often with added routes. These flights will prioritize medical supplies, food and other time-sensitive items.

“Operating regularly scheduled cargo flights means suppliers in China can get these supplies to hospitals and healthcare facilities across the US within hours, no the days or weeks it would take via cargo ship,” said Shawn Cole, Vice President of Delta Cargo. Delta’s flights are striving to maintain the supply line between the US and China, where a majority of PPE is currently manufactured.

With these adjustments, transporting goods is more unpredictable than ever. With years of expertise in the freight industry, Sheltered International is available to help importers streamline their air cargo experience and get their products up in the air quickly.

Contact us today to learn more about how we can help minimize shipping complications.

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How Importers Are Navigating Regulations to Reduce the US PPE Shortage

Sheltered International Donates 3,000 Face Masks to Nassau County First Responders

As medical-grade masks become increasingly rare in the United States, many importers are turning to the PPE category in an attempt to reduce the shortage. However, businesses unfamiliar with the process of importing medical equipment may encounter obstacles with FDA registration and licensing, delaying the much-needed shipments further. With years of expertise in the freight industry, Sheltered International can help facilitate this importing process to ensure medical personnel and first responders can access this necessary equipment as soon as possible.

With this knowledge, Sheltered International has imported 3,000 surgical masks and 100 face shields, to be donated to local Nassau County first responders. Chief Hurley of the Fernandina Beach Police Department, Sheriff Leeper of the Nassau County Sheriff’s Office, and Kaleigh Simmons of the Fernandina Beach Fire Department will each receive 1,000 masks.

The Availability of Personal Protective Equipment

Though personal protective equipment is available, it is in limited quantities. Many importers new to the medical supply industry are looking to place large orders of surgical masks in numbers of five million or more. With only several factories in China producing medical-grade masks, this order can be difficult to fulfill. Instead, Sheltered International suggests placing smaller orders weekly, particularly for those new to the industry. An order of 50,000 masks a week is both more manageable and more likely to be filled.

Managing FDA Registration

To expedite the import of PPE, the FDA has reduced the amount of information required to register products for nonmedical use; however, for medical use both the factory and importer of record must register with the FDA. For the importer, this license costs $5,238. Sheltered International is available to help importers navigate the registration process, saving them valuable time and ensuring their shipment doesn’t get caught in customs.

Importers must also remember that both they and the shipper need FDA registrations. Though many factories, including toy factories and clothing companies, have converted their facilities to make surgical masks, these factories are often not FDA registered. As such, they cannot ship or market their masks for medical purposes. If looking to import as a medical supplier, importers can ask Sheltered International to confirm FDA registration of the factory.

Chinese Restrictions on Medical Exports

On April 10, China issued additional restrictions on exports, including a mandatory customs inspection. These policies affect any medical supplies, including medical masks, protective gowns, thermometers, ventilators, surgical caps, goggles, gloves, shoe covers, ICU monitors, disinfectant tissue, and disinfectant.

New restrictions require the shipper to provide an 18-digit Code of Customs Clearance Form of Export Commodity for customs clearance, attained after the product receives its export commodity inspection, or CIQ. If the shipper’s name is not the same as the factory’s, a contract must be established between the shipper and producer. These codes are required per shipment and can take at minimum two to three working days; however, with a significant uptick in applications anticipated after these new restrictions were established, this timeline may extend to five to seven days, though the application can be done during production. Though they are likely to slow production and importing of PPE, advocates of the restrictions say these regulations have been established to prevent counterfeit goods from entering the market.

Facilitating Imports of PPE

For importers unfamiliar with the medical supply industry, registering with the FDA and securing the necessary documentation can be overwhelming. With years of experience in customs and freight shipments, Sheltered International can offer valuable insight into facilitating this process and guaranteeing these much-needed supplies can be delivered to those who need them.

Contact us today to learn more about how we can ease your import experience.

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