According to the shipping line Hapag-Lloyd, the transport of sea freight between the hinterland and Chinese harbors shows signs of gradual improvements over the last couple of days. Yet, the proper handling of reefers and dangerous goods remains a major issue in most of the mainland’s ports.
At Shanghai, Ningbo, or Xingang, hundreds of reefer containers are piled up, filled with foodstuff or other temp sensitive goods. A giant overflow caused by two factors: firstly, insufficient trucking capacity since many of the drivers are temporarily suspended from duty to minimize the risk of becoming infected by the coronavirus. In practice, this means that the capacity of land transport is clearly limited, which causes a major problem especially for reefers. Secondly, the issue is significantly aggravated by the lack of electrical sockets in some Chinese port terminals.
Shortage of sockets endangers reefers
Given the lack of sockets, large numbers of reefers piled up at Chinese ports need to be continuously cooled to safeguard their temperature-sensitive contents.
Hapag-Lloyd’s Director of Corporate Communications, Tim Seifert, confirms the reefer squeeze in some of the harbors. However, he adds that his company is kept well informed by its own employees working in China, should reefer problems occur. “We are thoroughly looking into this on a daily basis, have containers transshipped and idling and also move containers to outside depots or divert cargo to other ports with free plugs,” he states.
How much the virus will impact the transport business is still speculative
In total, Hapag-Lloyd serves 8 ports in China and runs a dozen stations. About a quarter of the shipping line’s total global business is related to China, Tim Seifert says.
It is not yet possible to precisely quantify the consequences for the shipping company of the production standstill in China, which has so far lasted several weeks and was caused by the overlapping of Chinese New Year and the coronavirus. “In terms of transport volumes and sales, much depends on the way, when, and how fast markets, productions and logistics chains recover,” he says. This is like looking into a crystal ball, because it is unclear when coronavirus will be overcome.
Ongoing shortage of trucking capacity
Similar to Hapag-Lloyd, many shipping companies have reduced capacities in the past weeks on the back of a lower number of cargo. This is because the production of the factories has not yet returned to the previous level, and - another major problem – large quantities of goods are jammed either in the terminals of seaports, or in the manufacturers’ warehouses. This, because there are still too few truck drivers available to dissolve the bottlenecks, as previously mentioned.
Short-term benefits, but will they last?
Turning to aviation, except for Wuhan, all airports in China are getting back to normal. However, many report major air freight jams because the coronavirus has led to a 70% reduction in transport capacity offered by airlines on flights to and from China. Many carriers have also cancelled their Blocked Space Agreements, enabling them to define their own prices. In the short term, this is a smart move because rates are currently going through the roof as the result of high demand and limited transport capacity. However, if this will pay off in the long run remains to be seen, because forwarding agents normally have a good memory!
Trains are alternative option to flying or shipping goods
As smart option to ocean and air, DSV hopes to capitalize on its rail solutions, promoting this product as an alternative mode of transcontinental transportation. “The rail journey from terminal to terminal currently takes between 11 and 15 days from northern and central China to Europe. Transit time from Europe to China is slightly longer at 18 – 20 days,” reads a press release from the Danish Group, published last Friday. Their rail product spans from full container loads (FCL) to less than container loads (LCL). An in-house DSV consolidation service looks after the loads traveling on westbound or eastbound trains.
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