Coronavirus Disease 2019 (COVID-19) Update
March 25, 2020, 6pm (CET)
OUR EMPLOYEES AND PREVENTIVE HEALTH MEASURES
The health and safety of our customers and employees remains our top priority. All Kuehne + Nagel offices have implemented actions according to recommendations from the World Health Organisation, including hygiene awareness, self-declarations and voluntary quarantine.
All our operations and offices have prepared business continuity plans, as COVID-19 is spreading wider and governmental restrictions are getting stricter. These plans include measures such as segregated shift schedules, working from home, the preparation of secondary locations and more.
GENERAL SITUATION IN OUR REGIONS
As the number of confirmed cases continues to rise, state and local authorities in the US, Canada and Mexico have called for more stringent steps to be taken for local governments and businesses. As a result, we have activated further control measures in our business continuity plans. Despite the challenging environment, all operations continue to function.
South and Central America
Several governments in South and Central America have declared “state of emergency”, establishing, among other measures, the closure of borders. Others have enacted national quarantine to prevent the spread of the virus forcing the closure of our locations, but they continue operating remotely.
As the virus continues to spread across Europe, we are the impacts on logistics flows. Although all of our European sites and offices continue to operate, we expect delays with shipments due to increased health and safety measures at various borders. For the impact on the different transport modes please see below.
As the COVID-19 situation is stabilising in China, business, in general, is returning to normal. Nation-wide, work resumption is above 80%. China’s manufacturing sector is also recovering with factories across the nation resuming production. Hubei Province ends its lockdown on March 25, work and production resumption to be followed. Lockdown for Wuhan City will end on April 8. China’s production has returned to close to normal. Transport movements, including trucking services, are also returning to normal status. China export trade starts to feel some impact due to supply chain disruption and the closure of business and manufacturing overseas.
With the increasing number of confirmed cases reported in several countries across South Asia, most of the local governments have stepped up their containment controls. These measures include but are not limited to 14 days self-isolation for travellers, restricted community movement and border controls. We have enacted additional health and safety measures, and activating our Business Continuity Plans where necessary and required.
Middle East and Africa
As the number of confirmed cases continues to rise, state and local authorities in the Middle East and Africa countries have called for more stringent steps to be taken for local governments and businesses. As a result, we have activated further control measures in our business continuity plans. Despite the challenging environment, all operations continue to function.
IMPACT ON ROAD LOGISTICS
With more and more governments issuing new measures, the situation in Europe is evolving very rapidly. Even though our network and all our offices across Europe are operating, we experience serious delays at several European borders due to increased health and safety measures. This is having an impact on many other linked transport lanes. The closure of many companies, being pick-up- or collection- addresses for our network, is affecting our operations and service.
Ferries between the European mainland and Finland are running. Sweden and Norway are accessible either via ferry or land bridge. Ferries and Eurotunnel from and to the UK (incl. Ireland) are operating without major impacts.
For an indication on border waiting times please consult the publicly available information via this link https://covid-19.sixfold.com/. As we cannot verify the data nor guarantee its accuracy, this link should be used for information purposes only.
For any country in Europe, we strongly ask shippers to check the availability and readiness of their customers to receive shipments during business hours, before handing shipments over to us. Shipments which cannot be delivered due to absent consignees will be returned to shippers at their cost.
In case shippers are not able to receive these returned shipments, storage cost will apply.In case of pick-up orders customers also need to ensure readiness of their pick-up addresses. If this is not given, cost of the pick-up attempts will be charged.
Further customers need to ensure that consignee’s will confirm receipt of cargo.
China and South Asia
Overall, trucking services in China continue to recover. The operation for cross-border trucking to and from Hong Kong (SAR, China) remains normal.
The China/Vietnam border (Pingxiang border) remains congested. The border committee had implemented corresponding measures including prioritising the release of cargo from exporters that are Authorised Economic Operator (AEO) high-credit or entering into the bonded area (subject to verification from the border committee).
With the 14-day quarantine measure imposed by the Vietnam government, we see a scarcity of (Laos and Cambodian) drivers for cross-border transportation from Vietnam into Thailand. Although the Thailand government had imposed a partial lockdown of Bangkok, Chiang Mai and Buri Ram provinces and declared a state of emergency, the cross-border movement for commercial and essential goods between Thailand and Myanmar/Laos/Cambodia is allowed. All drivers need to undergo health checks.
For cross-border trucking to Central Asian countries, China/Kazakhstan border (Horgos border) opened on March 18. We see congestion at the border due to the long holidays declared. The border authority has yet to announce the details of health safety measures.
Trucking to Europe via the China/Russia route (Manzhouli border) is continuing as normal. However, we expect an increase in health safety measures.
The Malaysian government has extended the movement control order until April 14. Borders are opened for the movement of commercial goods in and out of Malaysia. Shippers will need to obtain authorisation from the Ministry of International Trade and Industry (MITI) of Malaysia before shipment. As such, cross-border trucking services between Malaysia and Singapore/Thailand has resumed. With the announcement of a "complete lockdown" by India and lockdown by the New Zealand government starting from March 25. we anticipate delays in the movement of goods.
The situation and border control measures in most of these countries are evolving rapidly as the COVID-19 situation continues to change. We are closely monitoring the situation and will provide further updates on this page.
US, Canada and Mexico border restrictions only impact "non-essential" travel and do not apply to the transportation of goods and services. Additional US states have closed business deemed non-essential. The list of states with stay at home orders now includes California, Connecticut, Delaware, Hawaii, Illinois, Indiana, Louisiana, Massachusetts, Michigan, New Jersey, New Mexico, Pennsylvania, New York, Ohio, Oregon, Washington, West Virginia. Shippers are encouraged to advise their logistics service providers if they or their customers will be impacted to avoid cargo being returned and drivers sent to affected locations.
US domestic truckload capacity is tightening, but federal and state governments are committed to keeping the supply chain moving. The majority of LTL and Small package carriers will suspend physical signatures. In adherence to the “Social Distancing” policy, drivers will not be obtaining signatures from consignees. Drivers will record the exact time, note any exceptions and obtain the name of the person who is accepting the freight. As spot market truckload rates rise to highly affected areas, less drivers are willing to take loads into these areas forcing the ad hoc rates to climb. Urgent orders of retail goods drive rates up for van and reefer equipment. Retailers, including e-commerce outlets, rely increasingly on spot market providers to re-stock shelves immediately, while truckers report long wait times at pickup and delivery points.
Pennsylvania DOT reopened 13 of 30 rest areas with parking and temporary facilities. After pressure from the American Trucking Association states have reopened sites with temporary facilities, but limited services. Commercially run truck stops continue to operate with limited dine in options as governed by their individual jurisdiction.
IMPACT ON SEA LOGISTICS
Our sea freight operations and offices handling routes between the US and Europe are only slightly impacted for the time being. The main CFS gateways in US are operating normally but with reduced hours. Due to decreases in vessel operations and governmental directives, some ports are temporarily closed or terminals temporarily suspend operations. However, cargo is still flowing into/in US and Canada.
South Central America
There are currently no major restrictions on sea freight operations. The offices are still handling business, but with reduced staff or in home office mode. The ports are operational, but delays are expected in the terminals due to reduced staff, reduced attention hours and local quarantine measures. Argentina is in national quarantine and only allows essential cargo flows. Here, the ports and CFS work with skeleton staff. Bolivia also instructed general quarantine, so delivery from ports is impacted.
Terminal, depot and CFS operations in China are almost back to normal. The availability of reefer plugs at terminals in Tianjin, Shanghai and Ningbo improved. As carriers still see a decline in demand for shipments from China, they continue to announce blank sailings, which will probably continue until the end of March.
With the surge in the Coronavirus cases outside China, governments across the South East Asia region are stepping up their containment measures.
In the Philippines, Luzon (Manila), Visayas (Cebu) and Mindanao (Davao) had been placed under a state of "enhanced community quarantine". We expect delays in operations due to the restricted road travel for both commuters and general cargo.
The Malaysian and the Indian government had announced lock downs. All non-essential manufacturing, government and private business premises in the countries are not operating during this period. All essential services, such as ports and transportation companies, continue to run – this applies to all of South Asia.
In South Korea, seafreight logistics and overall supply chain remain stable with all trucking, customs clearance and warehousing operating as usual. Port congestion at Busan has eased since vessels resumed direct calls to Chinese ports.
In the other countries we see "business as usual" from a ports and carrier perspective, but with delays and equipment and space constraints due to blank sailings.
With continued blank sailings and the dynamic situation at various borders, impacts on our sea logistics business and barge operations in Europe become noticeable. The suspended services from Asia have caused an equipment imbalance, with high demand for exports from Europe not meeting the supply of import equipment. Cargo transportation is still allowed in order to sustain the supply of goods. The ports are operational with slower gate in / gate out process and delays in customs clearance. Processes in Italian ports are slower due to reduced working hours. While the situation in each country is evolving daily as authorities impose new regulations and restrictions, our local experts are at your full disposal to assist and support you with your specific requirements.
Middle East and Africa
We see no major impacts on sea freight operational capabilities, but a decrease of volumes at most port terminals. Turkey is facing slight impacts on operations. Ports, CFS and cargo vessels are still operating, but with precautionary measures. Mauritius is on lockdown.South Africa prepares for a national lock down as well.
IMPACT ON AIR LOGISTICS
The travel restriction between 26 countries in Europe and the US, that became effective on March 13, and the EU restrictions effective on March 17 only apply to passenger travel. The majority of airlines announced a drastic reduction of passenger flights offering limited capacity at market rates. Since the trade lane between Europe and North America is largely dominated by passenger aircraft, we have been experiencing a severe drop in the available capacity. In reaction to evolving capacity constraints due to severe cuts in belly capacity, we expect to see an increase in freighter capacity compared to last week.
In order to contain further virus outbreak, restriction on non-essential activities was put in place in a number of US states and between the US and its Northern (Canadian) and Southern (Mexican) borders. These measures do not apply to trade flows and all our branches continue to operate with reduced staff or in home office mode.
The rise of Coronavirus cases in Canada and Mexico and EU travel restrictions are also leading to limited available capacity in the market due to the heavy reduction of passenger flights and cancellation of some freighters.
Our airfreight operations in Europe continue running. However, with the majority of flag carriers closing down their passenger networks, we expect significant capacity constraints to all major markets. Increased congestion at airports and cargo rerouting via European hubs are effecting overall processing time and transit times of shipments. Overall, freighters are back on schedule and carriers offer additional charters on congested lanes such as Europe to the US.
South Central America
Following border closures and lockdowns of some South American countries and the subsequent drop in demand, carriers are reducing their international operations. The two main carriers Avianca and LATAM Airlines have drastically reduced PAX capacity. The overall operational status of airports, truckers and customs is stable, and all our airfreight branches are operating, in most cases, partially from home.
Middle East and Africa
Capacity constraints are also seen in the Middle East and Africa region with all airlines having suspended/reduced their passenger flights on the routings into the region. This week national carriers Etihad Airways and Emirates have suspended all passenger flights as per the UAE government’s directive. Cargo and emergency evacuation flights are exempt from this suspension and will continue. Our operations continue running with teams working from home/operating in split setups in all countries, including countries that have imposed countrywide lockdowns (at the moment South Africa and Jordan).
The overall situation with regard to the operational status of airports, truckers and customs clearance in China have returned to normal levels by 90%. Only Wuhan airport remains closed to commercial traffic. Production recovery is leading to an emerging transportation demand adding pressure on available capacity. Even though passenger flights are still cancelled outbound China and Intra-Asia capacity is slowly recovering due to the freighter increase.
Pressure on capacity caused by limited passenger flight activity is seen in the majority of South Asia Pacific countries. The capacity situation in India is becoming challenging as well due to the increased cancellations of passenger flights resulting in rate increase and longer transit.
With the majority of carriers closing down or making large cuts in their passenger networks, we see significant capacity constraints on all trade lanes.
We are working closely with our long-term carrier partners to have full transparency of the situation to address the needs and requirements of our customers. At this point in time, we can no longer assure lead times at their applicable rates. To the extent available, charter space will be offered at current market rates. Our Airfreight teams are fully informed about the latest development of this constantly evolving situation, and we encourage you to reach out to your respective Kuehne + Nagel contact person for any further questions and any specific requirements regarding your airfreight shipments.
SOLUTIONS FOR URGENT SHIPMENTS
We remain committed to serving our valued customers. Besides working closely with carrier partners to provide solutions for urgent shipments, we have also activated alternative transport modes and route solutions to support your business needs.
To avoid production and supply chain delays, and ensure the continuation of your operations, we have established weekly charter rotations serving routes into and out of China.
If you have out-of-the-ordinary shipping requests or need for critical logistics to ensure production flows, our Time-Critical solutions will help to expedite your deliveries and resolve transport delays.
Kuehne + Nagel Sea-Air service, a combination of sea freight and air freight transport modes, helps to expedite your deliveries and ease capacity constraints whenever possible.
Learn how Sea-Air services can ensure the continuation of your operations.SEA LOGISTICS
We offer KN Pledge for full sea container transport. It includes a guaranteed lead-time for your shipments with a money-back guarantee.
Customers can review in real-time, all available services, including regular service updates via our digital platform, seaexplorer. Seaexplorer enables customers to search for appropriate alternative service options in case of service disruptions.
Overall, tight conditions for Eurasian rail freight remain in place. To meet the increasing demand in China, Kuehne + Nagel is operating weekly KN Eurasia Express block trains connecting Xi’an and Hamburg/Duisburg with many European destinations through on-carriage options. With a direct line via Kaliningrad/ Mukran, cargo will be in Europe within 12 to 14 days.
We will continue to update you as the situation evolves. Please do not hesitate to reach out to your local Kuehne + Nagel representative if you need more information.
DISCLAIMER - All information is provided in good faith for guidance and reference purposes only. It is of a general informational nature, and Kuehne + Nagel takes no legal responsibility for the accuracy of the information provided via this document. Kuehne + Nagel makes no representation as to the accuracy or completeness of any of the information contained herein and accepts no liability for any loss arising from the use of the information provided.