Following reports of shoddy medical exports from the country, Chinese authorities have increased the export certification measures required for PPE and testing kits. The extra procedures and paperwork, designed to ensure the quality of products, have also contributed to increased costs and congestion because only certain airports have the resources to properly process these exports. Already inflated airfreight costs have gotten higher in the wake of these measures, and reports from the country indicate that customs brokers are raising rates due to the extra burden.
If your business is having trouble sourcing PPE or other medical equipment from China, reach out to us. Navegate’s team of customs brokers and international freight forwarders can help to minimize costs and speed up delivery.
Rates in Hong Kong are rising quickly as shippers look to avoid congestion at Chinese airports and diversify their supply chains. Just last week, rates for routes from Hong Kong to North America were up 26.8%, and they’re not likely to fall as North America battles an increasing daily case count. Additionally, factories in Germany are beginning to re-open, which will likely bring a heightened demand for non-medical goods and materials from the region.
Project Airbridge – FEMA’s airfreight relief program – is expanding to include smaller airports as destinations for cargo. The shift is aimed at alleviating congestion at major airports, as airfreight has been the preferred method to quickly import PPE and other medically-necessary equipment. The project has successfully transported over 750,000 N-95 masks, nearly 750 million gloves, and just recently, a shipment of over 4 million 3M respirators. Flights are continuing consistently, with 21 scheduled or in transit as of April 27.
While blank sailings have been necessary to adjust for falling consumer demand during the COVID-19 pandemic, carriers are also employing these cancellations to prop up pricing. Specifically, spot rates between Asia and North Europe have seen an increase as the withdrawn capacity reaches unprecedented levels. Industry experts have predicted that between 30% and 40% of capacity will be cut out of Asia-Europe routes as carriers fight to keep prices up, but there is no guarantee these measures will fully succeed as the pandemic persists.
The FMC has finally made its long-awaited decision on detention and demurrage. The ruling, expected to go into effect in the next couple weeks, evaluates the effectiveness of detention and demurrage charges in incentivizing the movement of cargo at ports. The new interpretive rule, which is more than 90 pages long, largely serves to provide a list of circumstances under which detention and demurrage practices may be unreasonable. In the coming weeks before its official publication in the Federal Register, the more than 90–page docket will take time to be reviewed and assessed for impacts on shippers.
Shippers are putting contract negotiations on the back burner as COVID-19 continues to disrupt supply chains across the country. While some shippers are extending current contracts for the time being, others are exploring shorter-term contracts (e.g. 90 days). This is partially due to market uncertainty, but social distancing and work from home orders have required negotiations to take place virtually, slowing the entire process.
North American Trade
As countries around the world formulate different approaches to fighting the pandemic, the United States’ dependency on Mexican inputs is creating massive problems for numerous American supply chains. President Andrés Manuel López Obrador has shut down the operation of the majority of its manufacturing, only allowing operation at companies involved directly in essential industries like health care and food production. The companies that supply materials which are exported and may later be turned into essential goods are largely prohibited from operating.
If your supply chain is experiencing delays coming out of Mexico, a little visibility could go a long way. Set up a call with Navegate to learn how we may be able to help you keep things moving.