The lifting of Covid-19 restrictions in China is leading to waves of infections in first-tier cities such as Beijing, Shanghai, and Shenzhen. This is causing disruptions to supply chains anew, according to the latest freight market report of Dimerco.
"This surge in cases has started impacting supply chains related to China, and it is expected to escalate coming up to the Chinese New Year," the global 3PL said.
In its Dec-January freight update, Dimerco also noted an air capacity trend that it also expects where giant companies are dealing directly with the carriers for regular volumes.
"This means that they are handling their own international freight and having freight forwarders manage only their origin and destination services," it said, noting that regular charter arrangements by global forwarders will decrease in 2023, leading to a potential increase in shipments through commercial flights.
In Europe, the report noted that the strike at Heathrow Airport had been suspended.
"The Unite Union suspended its strike at London Heathrow Airport (LHR), which was scheduled to happen between December 16 -19," Dimerco said, adding that members will vote on the revised pay offer with another planned strike between December 29 – January 1.
No expected cargo rebound
In terms of ocean freight, the global 3PL said there's "no obvious cargo rebound" towards year-end.
"It is anticipated that ocean carriers will continue to skip calls and conduct blank sailings to ease capacity issues for long-haul lanes. The collective capacity cut on a weekly average will fall in the range of 20% or more," it said.
Meanwhile, Dimerco noted that the Shanghai Containerized Freight Index (SCFI) dropped by 73% for week 50 compared to July, meaning most ocean rates are falling back to pre-pandemic levels.
Related to China, the global 3Pl said feeder services are suspended for south China and Hong Kong.
"The feeder operators in South China and Hong Kong have announced that feeder service from late December 2022 to the end of January 2023 will be suspended. The suspension is due to covid-19 quarantine measures for ship crews coming back from the Chinese New Year holiday," Dimerco explained.
The global 3PL then recommended considering cross-border trucking as the alternative solution for the suspended feeder services in South China and Hong Kong during the period.
Recently, China moved to reverse its "zero-Covid" policy as it announced the dropping of its quarantine requirements for international arrivals from January 8 in time for the new year holiday in February — a major step in its move to reopen its borders after nearly three years.
