Last updated: February 20, 2020 08:00 GMT
The Chinese economy has taken its first careful steps back to work, but getting back to normal will take some time and there’s still a lot of uncertainty.
Here are the latest updates.
Many provinces have ended their official shutdowns, and others are expected to do so between now and the end of the month. But the return to normal levels of production and the fulfillment of backlogged orders will take time.
Factories need permits certifying they’re in compliance with new hygiene measures to prevent new infections and inter-province travel is still limited in some areas, which means some workers can’t get back yet.
In addition, some people returning to work from more affected areas must be quarantined for 14 days, further delaying the return to a full workforce.
Some estimates expect production to return to 70-80% by early March.
Due to low levels of manufacturing, carriers have been canceling scheduled sailings, with those that managed to leave this past week only about 10% full. Though rates have decreased due to low demand, the expectation is that once production is back to near-normal levels, prices will spike to accommodate the backlog.
From the start of the outbreak, many passenger airlines, which normally also carry cargo, as well as air cargo carriers have canceled flights. Air freight rates are expected to spike once production resumes and air carriers start flying again.
Travel within most provinces is back to normal, but is limited between some provinces. These issues combined with the same workforce issues that manufacturing is experiencing will also impact the speed of recovery in trucking and in freight as a result.
Due to all these factors, the backlog in orders will likely lead to delays and increased freight rates for the near future.
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What steps can you take?
The situation is unpredictable, of course, but there are a few steps you can take right now:
- Anticipate delays in getting goods out of China. Unfortunately, much of this is out of your suppliers’ control.
- Check directly with your suppliers to confirm the order ready dates, as many offices will reopen Feb. 9th or 10th.
- If your goods need to be trucked between provinces, first confirm with your factory that goods are ready, and then consult with your freight forwarder to make a plan for maximum efficiency.
- If possible, book any upcoming shipments with an available ready date to get your goods moving as quickly as possible.
- For urgent orders, consider shifting some of your planned shipments from ocean to air. Note, however, that the extended shutdown will likely cause a spike in air cargo rates as well.
- If your order is not urgent, consider delaying your shipment until some of the backlog has cleared and freight rates likely return to normal.
- You can still book orders on Freightos.com, as our sellers have resumed operations.
- If your production is at an early stage, consider sourcing outside of China. Learn more with our webinar.
As always, we at Freightos.com are here to help. Please reach out if you have any questions or concerns.