Don’t Expect “Business as Usual” to Resume Soon in China

By Patrick Burnson, Executive Editor ·

February 20, 2020

As noted in our current feature, the coronavirus outbreak has been profoundly disruptive to the global supply chain, especially for importers heavily reliant on Chinese manufacturing. And while many Chinese provinces have ended their official shutdowns, and others are expected to do so by the end of the month, Freightos reports that resumption of work has remained slow.

Indeed, even in the cities and provinces that are back from the extended holiday, some factories are waiting to reopen out of fear that the close quarters in factories and dormitories could lead to more infections.

“Only about 10-20% of factories have received permits to reopen so far and though transportation within most provinces is back to normal, travel between provinces is still limited, which will also add to the slow recovery, says Eytan Buchman, CMO, Freightos.

Here some are some other observations and tips shared by the digital supply chain provider:

Ocean – Because of the shutdown, minimal freight is being shipped and carriers have been canceling scheduled sailings. Rates are down due to low demand, but are expected to spike once production picks up.

Air – Like ocean, so far activity is minimal. Rates are expected to spike as production resumes and air carriers resume flying.

Trucking – Travel within most provinces is back to normal, but is limited between some provinces. The lag in the return of workers is also impacting the speed of recovery in trucking.

Due to all these factors, the backlog in orders will likely lead to delays and increased freight rates for the near future.

What steps can you take?

• Expect delays in getting goods out of China. Unfortunately, much of this is out of your suppliers’ control.
• Check directly with your suppliers to confirm order ready dates.
• If your goods need to be trucked between provinces, first confirm with your factory that goods are ready, and then consult with your freight forwarder to make a plan for maximum efficiency.
• If possible, book any upcoming shipments with an available ready date to get your goods moving as quickly as possible.
• For urgent orders, consider shifting some of your planned shipments from ocean to air. Note, however, that the extended shutdown will likely cause a spike in air cargo rates as well.
• Finally, if your order is not urgent, consider delaying your shipment until some of the backlog has cleared and freight rates likely return to normal.

February 20, 2020