COVID-19 Latest Updates

COVID-19 & Typhoons Cause Supply Chain Disruptions, Airfreight Rates Increase, & Trucking Capacity Demand Remains High

By August 12, 2021 No Comments

Ocean  

COVID-19 continues in Vietnam and spreads to China, causing more supply chain disruptions including the suspension of the Meidong Container Terminal at Ningbo. The Vietnamese government implemented a lockdown for several weeks in August for Ho Chi Minh City and many of the southern provinces. Additionally, hundreds of factories have been forced to shut down for 3-5 five weeks, with plans to gradually (and tentatively) reopen this week.

In China, the Delta variant cases are rising and spreading to 16 of the 23 provinces in China. An outbreak was detected at the Meidong Container Terminal at Ningbo, and the terminal suspended its operations early Wednesday morning. This sudden suspension will likely result in delays in planned sailings. The new outbreaks appear to be worse than the Yantian Port closure, however, more people were ordered to stay at home sooner this time. Truck transport has slowed, with truckers needing to show negative COVID tests. Historically, all local outbreaks have been brought under control through mass testing, contact tracing, and targeted lockdowns. It’s likely that there may be delays as COVID-19 and its variants continue to affect the region. 

Typhoons leave ripple effects on carriers in Shanghai. At Shanghai and Ningbo, container lines are continuing to face delays. The typhoon led to temporary port closures, however, lengthy queues of ships waiting to load and unload are rampant and causing delays. It’s likely that at the world’s busiest port in Shanghai, delays are likely to last another week. 

Customs  

The strike by Canada Border Services Agency ends after a deal is reached with the Canadian government. After the CBSA’s union reached a deal with the Canadian government, the work-to-rule strike by employees ended, ceasing supply chain disruptions. During the strike, trucks were lined up at border crossings across Canada for hours. The agreement includes pay increases for the workers over four years and implementing protections against excessive discipline in the workplace.

Ports 

U.S. ports continue to experience congestion, with Los Angeles-Long Beach nearly doubling the number of vessels waiting to berth. The number of vessels at LA-LB is now in the 25-30 range, and all large vessels continue to be limited to 4 gangs with an average port stay of 3-4 days. At Oakland, the vessel wait time improves, with 2-5 days. 

At Seattle, port yard utilization is still at capacity (120%), with labor restrictions kept in place pending availability improvements. Containers are taking an average of 5 days post-discharge before showing available. The Ports of Miami, Vancouver, and Houston are also approaching capacity. 

Air

Atlas Air buys freighters to maintain capacity. Atlas Air Worldwide will purchase eight Boeing 747-400 freighters to ensure capacity as strong air cargo volumes surge amid supply shortages. With airfreight volumes above pre-pandemic levels and with many international widebody flights unavailable due to COVID-19, Atlas is flying more hours, but charging more for space on its freighters.  

Airfreight rates out of China increase as COVID impacts airports. After new COVID cases closed the Nanjing Airport, airfreight rates are soaring. With these COVID cases spreading to other cities including Shanghai, a 14-day isolation requirement on overseas crews would likely cause a pilot shortage, further causing capacity constraints in the air sector. Additionally, with preparation for the holiday season, there has been unprecedented cargo congestion at major international and domestic airports, which is also putting pressure on air freight rates due to capacity constraints. If you have any questions about air travel, contact one of our air experts.  

Trucking 

Texas Governor extends waiver for truckers at Port Houston. Due to the ongoing import surge, longer container dwell times, and the shutdown of the port’s two container terminals, truck drivers have been struggling to move a backlog of containers. Texas Governor Greg Abbott extended the hours-of-service exemption for truck drivers serving Port Houston for another 30 days. The port will be offering extended gate hours this week, with weekend openings and subsequent extended hours up for review.   

Trucking capacity demand remains high, but demand for truck drivers is even higher. Due to elevated consumer spending, demand for trucking capacity is still high, but truck driver demand is higher as the drivers that left during the COVID-19 pandemic have yet to return. Therefore, raising the pay for drivers has been the latest effort to hire more qualified drivers, with some companies willing to pay increases of up 20-30%, and even 40%. 

Rail

Midwest rail congestion causes disruptions. According to Maersk, the import rail dwell in Long Beach has extended beyond 8 days. The seriousness of the congestion in Chicago and Memphis has led to a reduction in the number of services, with Chicago going down to 3 services compared to 5-6 per week, and Memphis going down to 2 services compared to 4-5 per week.  

Canadian Pacific (CP) revises offer to acquire Kansas City Southern (KCS), continuing to compete with Canadian National Railway (CN). CP is offering a superior stock-and-cash proposal worth an estimated $31 billion. CP states that the offer includes significantly similar elements but offers substantially higher regulatory certainty than the CN proposal. KCS will meet on August 19 to vote on the CN merger agreement.

Other

Supply chain concerns rise with questions about the holiday season. As COVID-19 and its variants continue to cause major supply chain disruptions, retailers, shippers, and manufacturers are quite concerned about what the holiday season will look like. Labor shortages and capacity constraints are still salient problems, and companies are finding ways to incentivize workers to be on the retail frontlines. Read more about how the holiday season may be difficult for supply chains in an article by PYMNTS.com.