menu

Coronavirus Advisory

European Partners Update – April 28, 2020

Our team continues to meet multiple times a day via conference call with our European partners to remain current with the state of the market for air and sea freight capacity and the state of business. Our goals are to relay the most accurate information to our customers, to continue to proactively work to protect space and rates, and to work within the confines of a fluid situation for capacity with planes, trucks and ships.

Mexico:

President Andres Manuel Lopez Obrador showed willingness to reach an agreement with the United States to restart operations in complementary industrial sectors for both economies, such as the automotive and agricultural, which have been stopped as preventive measures against the spread of COVID-19.

“In due course, there’s going to be an agreement, when they open, and we have committed, especially with national businessmen, to analyze these openings to little by little return to productive normalcy in the border,” said the President in his daily press conference.

Air freight: 

There has been no new significant return of passenger flights. However, an increasing number of carriers, both US and domestic, are continuing to operate cargo-only flights utilizing their passenger aircraft. European operators were granted an exemption by their authority to load cargo in the passenger cabin on the main deck and the U.S. Federal Aviation Administration recently did the same, opening the door for U.S. carriers like United, American and Delta to carry more freight on their aircraft.

U.S. carriers are also increasing their frequencies between major cities, meaning that there are an increasing number of opportunities to secure air freight capacity. Please speak with your TOC representative to learn more and get a quote.

Sea freight:

We have received confirmation from several of our key carrier partners that there are no additional blank sailings scheduled for May or June on the trans-Atlantic. Carriers are working to balance the freight that is moving with the capacity they have in the marketplace right now.

For our clients who have been sharing forecasting data on an ongoing basis, we have secured space for pre-bookings for future sailings. If there are critical shipments that require protected space on the trans-Atlantic or trans-Pacific, share this information with your account manager as early as possible because it is a process for us to request and secure space at this time.

Germany opening in slow, controlled fashion:

We have received guidance from ProTrans that this week, shops and malls began reopening throughout Germany. Schools will reopen in early May in Germany and in the Scandinavian countries.

Germany was able to accomplish this through rigorous testing of a large and representative percentage of the population—a level that the United States is still working to reach.

There are rules, though, including that everyone must wear masks when going shopping or to public places.

At a factory level, suppliers are informing us that truck drivers coming to pick up and drop off cargo are subject to temperature scans and are expected to wear a mask and gloves to protect themselves and others. Suppliers are refusing to load drivers who will not submit to having their temperature taken.

Because the rules are being imposed on a company-by-company basis, we are working with each factory and asking before sending a driver what their particular requirements are in advance to ensure a successful pick up or delivery.

Export control checks declining: 

The EU, like the United States, has imposed restrictions on the exports of certain items which could be used to produce PPE or other medical equipment for health care workers and others battling COVID-19.

The first week these restrictions were imposed, we saw 3,000 Customs checks applied in the north Germany ports. The customs authorities have now done a better job refining reviews of manifests, booking and documents and at last report, that figure dropped to only 200 per week.


CBP to postpone duty payments by 90 days for eligible import entries. — April 20, 2020

On Sunday, April 19th, the White House issued an Executive Order entitled “Executive Order on National Emergency Authority to Temporarily Extend Deadlines for Certain Estimated Payments.”

Following the publishing of this EO, Customs and Border Protection (CBP) issued CSMS #42423171 – COVID-19 – 90 Day Postponement of Payment for the Deposit of Certain Estimated Duties, Taxes, and Fees.

What is it?

CBP is postponing duty payments for eligible entries from eligible importers by 90 days for

  • Entries from March and April 2020 which have not yet been paid.
  • This includes March entries to be paid in April’s Periodic Monthly Statement (PMS) and any eligible entries between now and April 30th which are to be paid by single check, daily statement or Periodic Monthly Statement in May.

What are the eligible entries?

Essentially, the major exclusions from this postponement are any entries with antidumping/countervailing (ADD/CVD) duties or entries with trade remedy duties under Sections 201, 232 (steel and aluminum) and 301 (China, EU/Airbus dispute).

Entries that are straight-up type consumption entries with column 1 duties not subject to additional trade actions are what are primarily eligible.

What is an eligible importer?

CBP laid out that the program applies to importers who are suffering “significant financial hardship.” CBP’s definition of this per the CSMS message is:

An importer will be considered to have a significant financial hardship if the operation of such importer is fully or partially suspended during March 2020 or April 2020 due to orders from a competent governmental authority limiting commerce, travel, or group meetings due to COVID-19, and as a result of such suspension, the gross receipts of such importer for March 13-31, 2020 or April 2020 are less than 60 percent of the gross receipts for the comparable period in 2019.”

What is the deadline?

Unfortunately, for our importers who pay by PMS, we have until 11:59 PM ET tonight to change March PMS entries. We will also be reviewing our daily statements to see what can be moved as well.

To say that this has set us scrambling with a little over 24 hours from the time of the announcement to the deadline for a large number of entries is an understatement. Our customs brokerage department are making this their primary focus this morning. We ask that you please reach out to your TOC account manager for more details and to let us know if your company is interested or believes it is eligible for this 90-day postponement program.

 


Protectionism at home and abroad – April 7, 2020

As countries are working to contain COVID-19 among their respective populations, a disturbing trend is appearing that is impacting legitimate commerce.

In the United States, the President has invoked the Defense Production Act – a law designed to use the power of the federal government to compel companies to take action. Notably, the government used it to compel GM to make ventilators which they were already working on.

Late last week, the President signaled his intent to use it on 3M in order to ensure a sufficient supply of masks and respirators for the domestic market by prohibiting them for export. The White House and 3M have since reached agreement allowing for exports, but this same “keep it here” has begun to appear in other countries.

In India, the government was prohibiting the export of a number of potential treatment drugs, but has since lifted the ban after pressure from the United States.

What we are hearing now is that the European Union has taken steps to prohibit the export of any commodity that can be used for medical support during the pandemic. They are reviewing export manifests in greater detail and generic words such as “textiles” are triggering a delay while the actual commodity is relayed to them. Customs authorities see textiles as having the potential to be used to make masks when they are instead specifically for a different industry such as automotive and do not have the ability to be repurposed for medical use.

This increased scrutiny has also been extended to plastic parts as well.

Overcrowded ports, coupled with blanked sailings for Easter and a drop in shipping volumes, mean any type of hold associated with additional customs scrutiny has the potential to cause a multiple-week delay.

The declaration from the Commission dated March 14th is attached. The challenge we have is that there are some numbers which are “dual-use”. In other words it is a generic classification that can be used for multiple items.

We are speaking with exporters to ensure that we provide more detailed descriptions for bills of lading and export declarations to eliminate the potential for confusions and subsequent holds. We will also continue to work very hard with customs authorities to try to prevent these delays.

Download the declaration.


European factory closures continue, trucking supply declines correspondingly – April 1, 2020

We continue to hear from our partner agencies in Europe that because governments are taking increasing steps to reduce community spread, businesses are closing or being ordered closed by local and national governments.

Anecdotally, and based on what we are hearing from customers and their corresponding suppliers, these drops are from 60–70% in Spain and 40–50% in France. We have heard and seen some component factories that are open or being retooled to produce medical equipment, but these are the exception rather than the rule.

With the decline in cargo being shipped comes a concurrent drop in available trucking.

Many truck drivers are from central and eastern European countries and rather than sheltering in place in whatever country they may have had loads, they are returning to their home countries and families. From a supply and demand point of view, this is good because it equalizes the amount of trucking in service with the amount of cargo being produced.

Indian lockdown continues

The Indian government’s decision to seal off the country has led Indian airports and seaports to restrict imports and exports. Of all the countries that are dealing with the impact of COVID-19, India is perhaps the most restrictive. The announced lockdown runs until April 14th and the government is allowing the movement of emergency shipments. At the moment, if the shipper can secure the approval of the local authorities, cargo can be handed over and taken to the airport. We are working through these issues for clients on a case-by-case basis.

Port congestion in the United States on the uptick

With many warehouses closed, the only cargo moving on and off docks is for essential items such as medical equipment and supplies. The cargo which remains behind as vessels full of exports from China and other Asian countries will start to crowd ports. This congestion comes at a time that because of the low volumes from Europe and some other countries, ports are choosing to close for a day or two or drop second or third shifts of longshore labor to reduce their costs.

We are working with our truckers and carriers to minimize the additional costs that come with the holding of cargo at terminals or demurrage or detention for having equipment out past free time.

Duty relief? Maybe this time for real, but not for everything. 

Bloomberg posted a story late on March 31st which indicates that the White House may have finally signed off on duty deferral for ninety days and the conditions under which they will apply.

You can read the story here, but the tone is that an Executive Order will be issued deferring duty for MFN column one duties that are being collected, but not on 301 and 232 duties. We will continue to monitor this and if something concrete happens, we’re sure it will be all over the news but will issue a separate advisory with the EO and clarification from CBP how they will handle collection.


Indian Lockdown, U.S. Rail Challenges, Turkish Trucker Quarantine and Air Freight is “Charter or Bust” – Thursday, March 26, 2020

India’s government locked the country down for its 1.3 billion people.

As COVID-19 starts to spread in India, the government has taken the very firm and strict stance that businesses must shutter and residents must stay home. While the United States and Europe are doing very much the same thing, India has taken it one step further with closures of airports and seaports. This means goods trying to enter—and exit—the country are in limbo.

TOC is working with our partners in India because each state is interpreting and administering the government’s decision with some variations. Please speak to your TOC representative about the most current state of play for your shipments into and out of India.

 

Turkey is quarantining truckers crossing into the country regardless of citizenship.

While most European countries are either allowing truckers to cross borders freely regardless of citizenship, Turkey has imposed very strict controls on truckers entering the country, essentially dooming drivers to a one-way trip with a two week quarantine.

Neighboring Bulgaria is looking to capitalize on Turkey’s decision which affects citizens of 67 countries including most of the EU. Their plan? Transloading of cargo into Bulgarian trucks for the final transit into Turkey as their country has not been given a mandatory fourteen day quarantine restriction.

 

US rail experiencing intermittent, inconsistent departures and transit times.

Logistics companies and shippers are monitoring the cascading effect of COVID-19 on supply chains. The down-the-road potential for intermodal cargo moving inland and to the ports for export is that a drop in consumer purchasing translates into a drop in the number of trains being operated by Class 1 railroads.

This is the conclusion of the American Association of Railroads. FreightWaves covered it here.

 

Air freight options are increasingly only charters.

Whether a privately-operated cargo charter from an all-cargo carrier offered through a large consolidator or a passenger airline offering their belly space for hire to what is increasingly the highest bidder, we continue to work in a very fluid market to ensure that our clients who have need of air freight between two points have access. We strongly encourage shippers to contact our spot quote team for an estimate of both cost and transit time, as the regular scheduled intervals with flight and truck connections are all in flux at this time.

 


Blanked Sailings, India Reacts to COVID-19, Italian Government Requires Shutdowns – Monday, March 23, 2020

TOC, along with our global partners in Europe and Asia, is committed to monitoring the conditions in countries where our customers supply chains reach – whether as an origin, destination or transit point.

With a new week comes changes across Europe and the Indian subcontinent.

 

European blanked sailings

We have learned that there are planned blank sailings following Easter week (week 17). While we would have hoped that the paused operations of many businesses for the next several weeks would lead them to restore service during these weeks, sadly this is not the case.

As a result, we are working with other carriers to identify services and transit options to the United States that will not cause additional delays in customers’ supply chains.

 

Italian factories to shut down through April 3rd 

The government of Italy has made the difficult decision to demand the closure of most factories until April 3rd.

This announcement was made on Saturday by Italy’s Prime Minister Giuseppe Conte. ““It is the most difficult crisis in our post-war period,” Prime Minister Giuseppe Conte said in a video posted on Facebook, adding “only production activities deemed vital for national production will be allowed.”

 

India begins taking action to combat COVID-19

The number of cases in India is on the rise (it has reached 450), and we have been informed that different states within the country are taking different actions making it challenging to get a cohesive picture of the response and what is and isn’t permitted.

  • The state government of Delhi has ordered the border with other states closed through March 31st and is not allowing even commercial vehicles to enter Delhi.
  • Maharashstra state is in a complete lockdown and the Port CFS warehouses are closed until March 31st.
  • Gujarat state is also on a lockdown. Ahmedabad customs brokers have ceased work through March 31st and no further clearances are happening at either the inland container depots or the airport.

As we learn more and can update clients, we will continue to provide the most current information at our disposal.

 


Easter Blanked Sailings, Shelter-in-Place Orders and Business Continuity – March 20, 2020

Every day, TOC holds a status call with our account managers, planners and partners in Europe to share what changes in conditions have taken place in the preceding 24 hours. This is insightful for all of us because as we rely on our team of subject matter experts who each have a piece of our customers’ overall supply chains from beginning to end, it is critical we have the most current information with which to make decisions.

TOC is continuing to operate on a remote work force with a small, core team coming into our physical offices while remaining staff who are able to function remotely are doing so with overall success. It’s an adaptation for people who were either not remote or part-time remote, but something we’re all learning to cope with together.

 

Post-Easter blanked sailings.

On our call today, we discussed the fact that long-planned blanked post-Easter sailings will impact ocean freight lift from Europe to the United States. We have been working with clients who are open in Europe to arrange earlier pickups than their scheduled consolidation dates, but are concerned that if there are overbookings and rolled containers prior to Easter, there may be a lag in getting them on the water.

Know that we are working diligently to protect our customers’ space and cargo.

 

Ad hoc air freight by charter and passenger operator.

As travel restrictions imposed by the US, Canada and the EU have reduced by 75% or more the passenger belly cargo space on the transatlantic, we have seen that nature abhors a vacuum and solutions are rapidly appearing.

In addition to regularly scheduled freighter service that remains from companies like Lufthansa, Emirates, AirBridge and others, US passenger airlines like American, Delta and United are either offering charters or running cargo-only flights between points. These flights aren’t tied to passenger demand, but rather cargo demand, and are operating on unconventional point pairs to meet the needs of cargo.

 

Logistics companies protected as critical infrastructure by DHS.

In the past 24 hours, California, Nevada, Illinois and New York have announced either shelter-in-place or stay-at-home emergency actions meant to reduce the spread and transmission of COVID-19. Other states are placing curbs on the number of people permitted to gather in a single location.

As these restrictions have come into effect, we have had a number of questions about whether or not ports, truckers, airports and other businesses can remain open.

TOC, and other logistics companies, are part of the “Transportation Systems Sector,” one of sixteen designated “Critical Infrastructure Sectors” as defined by the Department of Homeland Security.

From the DHS website:

The Transportation Systems Sector consists of seven key subsectors, or modes:

  • Aviation includes aircraft, air traffic control systems, and about 19,700 airports, heliports, and landing strips. Approximately 500 provide commercial aviation services at civil and joint-use military airports, heliports, and sea plane bases.  In addition, the aviation mode includes commercial and recreational aircraft (manned and unmanned) and a wide-variety of support services, such as aircraft repair stations, fueling facilities, navigation aids, and flight schools.
  • Highway and Motor Carrier encompasses more than 4 million miles of roadway, more than 600,000 bridges, and more than 350 tunnels. Vehicles include trucks, including those carrying hazardous materials; other commercial vehicles, including commercial motorcoaches and school buses; vehicle and driver licensing systems; traffic management systems; and cyber systems used for operational management.
  • Maritime Transportation System consists of about 95,000 miles of coastline, 361 ports, more than 25,000 miles of waterways, and intermodal landside connections that allow the various modes of transportation to move people and goods to, from, and on the water.
  • Mass Transit and Passenger Rail includes terminals, operational systems, and supporting infrastructure for passenger services by transit buses, trolleybuses, monorail, heavy rail—also known as subways or metros—light rail, passenger rail, and vanpool/rideshare. Public transportation and passenger rail operations provided an estimated 10.8 billion passenger trips in 2014.
  • Pipeline Systems consist of more than 2.5 million miles of pipelines spanning the country and carrying nearly all of the nation’s natural gas and about 65 percent of hazardous liquids, as well as various chemicals. Above-ground assets, such as compressor stations and pumping stations, are also included.
  • Freight Rail consists of seven major carriers, hundreds of smaller railroads, over 138,000 miles of active railroad, over 1.33 million freight cars, and approximately 20,000 locomotives. An estimated 12,000 trains operate daily. The Department of Defense has designated 30,000 miles of track and structure as critical to mobilization and resupply of U.S. forces.
  • Postal and Shipping moves about 720 million letters and packages each day and includes large integrated carriers, regional and local courier services, mail services, mail management firms, and chartered and delivery services.

TOC will continue to operate on behalf of our clients and vendors and in concert with our global partners to keep the cargo moving while encouraging the world to #flattenthecurve.

 


 

European transport situation remains fluid as China reopens for business – March 18, 2020

With current dynamic state of freight transport, we are sharing our latest market intelligence to help guide customers in minimizing, wherever possible, delays and extra costs in their supply chains.

For Europe, we are not currently seeing issues preventing pickups and truck transport within EU countries. However we are monitoring several areas of concern, including supplier closings, border crossings and driver availability. It is important for buyers to confirm with European suppliers that they will be open for pickups. Some factories are temporarily closing or reducing hours for health- or supply-related reasons. Be aware of potential delays with cargo or paperwork as drivers and warehouse workers follow new health protocols. While the EU is starting work to speed up border crossing, increased border checks around driver health and paperwork have created delays at various border crossings. Waits on the German border to Poland, the French border to Germany, the German border to Switzerland and French side of the Chunnel are currently among the longer ones. Driver availability is a potential future issue, as Europe sources 40% of its drivers from Poland, and the backup on the German-Polish border is thought to be drivers headed home for shelter.

Sharply-reduced passenger flight schedules have cut large quantities of belly cargo capacity from the Europe-U.S. market. As a result, rates on trans-Atlantic freighters are at levels not previously seen. Scarce capacity is driving a sellers’ market for air cargo with airlines requiring payment guarantees for bookings of any size. Though several passenger airlines are offering cargo charters on passenger aircraft, TOC recommends using scheduled freighters and freighter charters as being more dependable solutions as EU leadership continues to debate even further passenger travel restrictions. TOC advises customers who anticipate using air cargo over the next 30 days, and possibly longer, to put their best forecast together in order to secure space.

On the ocean front, empty container availability and equipment imbalances remain an issue globally. China-U.S. traffic is in process of returning to normal, though empty containers, particularly at inland Chinese locations, remain a problem. Blanked sailings from China have been reduced, but still exist. TOC has been successful in repositioning containers for customers in a number of cases.

As cargo begins to hit U.S. ports, TOC is monitoring the potential ripple effects of any general U.S. slowdown, including intermodal delays with trains not full, driver and chassis availability, new port procedures and compliance requirements. Importers will need to take extra care to avoid costly waiting time, container imbalance surcharges, and storage.

This is one of the most fluid transport situations most logistics professionals have worked through in their careers. Unlike many forwarders, TOC staff is fully capable of working 100% from home to be able to serve customers with quality solutions in this challenging time in our industry.


Protection on the dock: Working to ensure safe person-to-person contact – March 13, 2020

The challenges posed by COVID-19 and the solutions that are required to simultaneously maintain the flow of goods while ensuring the protection of vital and important workers who have person-to-person contact during the process of picking up and delivering cargo is of incredible importance to contain the spread of the virus.

Our global partners have been receiving notices from some pickup locations in Europe where demands are being made that truckers who are coming to pick up or drop off cargo must be equipped with personal protective equipment including, but not limited to, protective masks, gloves and clothing while maintaining a minimum required safe distance of 1.5 meters.

It is important to realize that trucker drivers, depending upon whether or not they are picking up air freight, LCL sea freight or even multiple FCL pickups in a day, would be required to keep a small stockpile of single-use protective equipment. While we understand the importance of requests being made by certain suppliers, a driver making eight or ten stops in a day would have to carry a tremendous amount of protective gear.

The EU and the CDC have instituted a number of guidelines around person-to-person contact and ensuring hands are regularly and vigorously washed with soap and water and, when that isn’t available, utilizing hand sanitizer with minimum criteria.

As we work through the logistics of trying to meet the demands of pickup or delivery locations while securing adequate supplies of the necessary personal protective items such as masks, gloves, sanitizers and other materials, we ask patience and understanding and flexibility to find common ground where everyone is kept safe and cargo is kept in motion.


European travel restrictions imposed by Denmark, Poland and Czech Republic – March 13, 2020

Today, in an effort to flatten the curve of COVID-19, a number of European countries announced their intention of closing their borders to foreign nationals. As of this writing, that list includes Denmark, Poland and the Czech Republic. See: https://www.bbc.com/news/live/world-51866403

At this early stage, much like with the announcement from the President on Wednesday night, the initial reporting made it seem that the measures were broad and sweeping and, like everything else, the devil is in the details. While we continue to seek additional information for Poland and Denmark for exceptions, the Czech Republic has indicated that exceptions will be permitted for several professions, one of which is truck drivers. See here: https://www.praguemorning.cz/czech-republic-state-of-emergency/ This is important because truckers very seldom operate only within the country of their citizenship.

What is important to note is that despite these measures and the announcement by the United States which will impact transatlantic air cargo capacity, air and sea lanes continue to be open for the movement of cargo from critical component producers to manufacturers for assembly.

TOC Logistics anticipates that as Europe and the United States work through many of the same challenges in the movement of goods and people as China had to in January and February, the next several weeks will pose operational challenges as we seek solutions to keep cargo moving.

Rest assured that we are here, we are committed and working together with our global partners, our customers and their suppliers, we will all work together to ensure continuity of business as we confront this global health challenge and work to be prepared for the sudden uptick when the supply/demand/capacity equation realigns.


European Equipment Shortages: March 5th, 2020

As we have been detailing on our COVID-19 update page, the lack of cargo departing China is creating equipment imbalances in all parts of the world.

Exporters rely on a steady supply of import containers to load for export, whether back to Asia or elsewhere in the world. These exports take on many forms—raw materials for manufacture, finished goods for sale or agricultural products for consumption half a world away.

The outbound container volumes from Asia—and China most specifically—ensure an available supply of containers in markets such as the EU and United States.

According to Global Trade Magazine, “This is a direct result of the ocean carriers’ blank sailing strategy which is triggered by the low/no volumes on major shipping routes. Based on ocean carriers’ comments and the Container Availability Index , it is expected that this trend will continue, if not only worsen.”

With little or no exports from China and with the number of blanked sailings, no containers are moving anywhere in the world and this includes loaded and empty boxes at key European seaports.

In Hamburg, the HHLA terminal is over 100% capacity (currently operating at nearly 120%) and have implemented a rule that export containers cannot be delivered more than 48 hours prior to the export vessel’s arrival.

One of the two largest shipping companies in the world now faces not just a shortage of containers in Europe, but a near total absence of them leaving them unable to accept export loads leaving the EU.

While many shipping lines are trying to reposition empties to areas of higher demand, it’s a bandage on the shortage. TOC and ProTrans expect to see equipment shortages until mid-April, though the cargo community is working diligently to employ the corrective actions necessary to keep cargo moving if at all possible.

In the event of an outbreak in the US or MX, the entire TOC team will be able to work remotely—the impact of an outbreak will be more significant on active warehouse handlers and employees and truckers/drivers

Some ports have announced slow down days. For example, in Baltimore, “Due to current declines in international container volumes, Seagirt Marine Terminal will be closed on the following days:

  • Thursday, March 5th
  • Tuesday, March 17th”

Another issue is the increase in rates for air freight shipments as flight cancellations are coming in from flights out of Italy and South Korea.

Other pricing impacts, among others but not limited to:

  • Recovery adjustment surcharges for exports from US to all worldwide destinations (widely published since last Friday 28th)
  • Import – Equipment Imbalance Surcharge
  • Emergency Surcharge for Inland Pickup in Europe

The best thing that TOC can give our customers—and that our customers can give us—is information. We will continue to advise on equipment availability, sailings and the conditions at the ports. In return, we kindly ask our customers to continue to be as transparent and forthright with us in their forecasting, production schedules and equipment and space requirements.

While we do not control the carriers or the equipment they are responsible for positioning to move cargo, by giving them the best possible information we can try to protect and ensure that TOC and ProTrans customer bookings are accepted, containers are available and cargo sails as scheduled.


COVID-19 Update: February 28th, 2020

Due to the urgency with which suppliers are trying to move cargo, all-cargo air charters are on the rise and capacity on cargo airlines is at a minimum with fluctuating rates.  We are being told by airlines to book now to get in line and we will find out the actual rate for the shipment when the flight time gets closer.

European road update:

Italy is showing signs of distress; the availability of trucks nationwide is very low and they have closed parts of the border with Austria. Additionally, there are staffed border checks and many carriers have expressed a disinclination to take loads to Italy. At the present time, we are able to cover loads destined for consignees in Italy.

Korean air update:

We received the following update from our South Korean partners this morning:

“More than half of newly confirmed cases (of Coronavirus) are linked to a branch of a religious sect in the southeastern city of Daegu. Of the 256 new cases, 182 are in Daegu, 300 kilometers southeast of Seoul, and 49 are in the neighboring North Gyeongsang Province.

Other major provinces and cities have also reported some infections with Seoul reporting another six cases, the Korea Centers for Disease Control and Prevention said in a statement.

 We have received the following airline updates:

  • Delta Airlines: Incheon to Detroit, Atlanta and Seattle – reduction of flights but nothing yet fixed. Incheon to Minneapolis – Suspended
  • American Airlines: No determination yet
  • Korean Airlines: San Francisco and Honolulu flights suspended 1.March through 30.April.
  • Hawaiian Airlines: Flights suspended from 1.March through 30.April. 

The Korean market’s options are far more limited than China’s and with a severe reduction in passenger options all that will remain are transshipment options which are also constrained by flight operations in neighboring countries such as Japan, Taiwan, China and Hong Kong.  

This will have a direct impact on space and rates and we encourage shippers to communicate their needs as early as possible so that we can work first to secure space and then confront whatever the rate issues are on a shipment by shipment basis.

Asian seafreight update:

We discussed the problem of empty containers not being where they needed to be for loading exports from Asia once factories begin working at full capacity because of blanked sailings and other factors.

There are now rumblings of a Container Imbalance Surcharge which will be used to offset the cost of repositioning equipment where it needs to be. The specific amounts and lanes have not yet been fixed, but we are monitoring and will share this information when we know more.

COVID-19 Update: February 27, 2020

As the stories in the news turn from the impact on supply chains to the spread of the virus to multiple countries around the world, we wanted to keep the focus on the situation in China for manufacturing and shipping and provide an update from our partners in country.

We received the following update today:

“HUBEI Province is in lock down mode, where coronavirus outbreak is most severe in China.  As Jingzhou City is located in HUBEI Province.  Suppliers in Jingzhou City must be closed.  Under traffic control, only government vehicles and vehicles carrying necessities and medical suppliers & equipment may pass through.

 As majority of factory workers are from HUBEI and they are not allowed to leave HUBEI Province, all reopened factories in other parts of China are under-staffed.”

The figures below were collected across all of China’s provinces and reflect the percentage of companies reopened.

Anhui Province 92%
Beijing Municipality 61.2%
Fujian Province 90+%
Jiangsu Province 95%
Jilin Province 85%
Liaoning Province 95.6%
Shandong Province 91.1%
Shanghai Municipality 70+%
Shangxi Province 80.7%
Sichuan Province 92%
Tianjin Municipality 61.9%
Zhejiang Province 99.8%

In Hubei province, the government has decreed that all companies with the exception to health and medical industry and necessary products and service suppliers must remain closed until the

end of the day on March 10, 2020. The Hubei provincial government has also forbidden non-crisis management vehicles and private cars on roads.

In the United States, we have seen the flight suspensions by carriers such as American, United and Delta. There is a story that Spring Airlines in China is offering flights between Shanghai and Chongqing – three hours apart – for a little over $4.00. An estimated 10,000 daily flights have been cancelled in February.

Carriers have continued to blank sailings into March and the lack of sailings will mean that when factories reopen, the concern over the number of available empty containers for eastbound loading will be a factor as well.

Next week, TOC Logistics representatives will be in attendance at the annual Transpacific Maritime Conference sponsored by the Journal of Commerce. We will be listening very closely to carrier representatives and economists on what they forecast will happen in the coming weeks ahead.

We received the following update from our Korean partners this morning:

“More than half of newly confirmed cases (of Coronavirus) are linked to a branch of a religious sect in the southeastern city of Daegu. Of the 256 new cases, 182 are in Daegu, 300 kilometers southeast of Seoul, and 49 are in the neighboring North Gyeongsang Province. Other major provinces and cities have also reported some infections with Seoul reporting another six cases, the Korea Centers for Disease Control and Prevention said in a statement.

”As you can see, both area city of “Daegu” & “North Gyeongsang Province” are widely infected by virus but it’s no problem for everybody to go back to/from both areas but it’s not recommended by government. Please be advised that below supplier is located in both area among supplier in KR as follows:

 DELTA 

(1) ICN / DTW, ATL, SEA : Reduction of Flights bud Not fixed

(2) ICN / MSP: STOP SERVICE

(3) Effective Date : From 1st, MAR to 30th, APR 2020
– HA : Cancel Flight Schedule
– AA : Not Determine but will be updated
– KE : SFO DIRECT & HNL Flight Cancelled –

This means we can’t offer regular twice per month services for a while because the carrier doesn’t provide rate & space so bookings are very irregular in our market. We will need to evaluate your quotes on a case by case for a while so another update will be announced as soon possible.


Coronavirus Update – Thursday, February 27th, 2020

As the stories in the news turn from the impact on supply chains to the spread of the virus to multiple countries around the world, we wanted to keep the focus on the situation in China for manufacturing and shipping and provide an update from our partners in country.

We received the following update today:

“HUBEI Province is in lock down mode, where coronavirus outbreak is most severe in China. As Jingzhou City is located in HUBEI Province. Suppliers in Jingzhou City must be closed. Under traffic control, only government vehicles and vehicles carrying necessities and medical suppliers & equipment may pass through.

As majority of factory workers are from HUBEI and they are not allowed to leave HUBEI Province, all reopened factories in other parts of China are under-staffed.”

The figures below were collected across all of China’s provinces and reflect the percentage of companies reopened.

Anhui Province 92%
Beijing Municipality 61.2%
Fujian Province 90+%
Jiangsu Province 95%
Jilin Province 85%
Liaoning Province 95.6%
Shandong Province 91.1%
Shanghai Municipality 70+%
Shangxi Province 80.7%
Sichuan Province 92%
Tianjin Municipality 61.9%
Zhejiang Province 99.8%

In Hubei province, the government has decreed that all companies with the exception to health and medical industry and necessary products and service suppliers must remain closed until the end of the day on March 10, 2020. The Hubei provincial government has also forbidden non-crisis management vehicles and private cars on roads.

In the United States, we have seen the flight suspensions by carriers such as American, United and Delta. There is a story that Spring Airlines in China is offering flights between Shanghai and Chongqing – three hours apart – for a little over $4.00. An estimated 10,000 daily flights have been cancelled in February.

For ocean shippers:

Carriers have continued to blank sailings into March and the lack of sailings will mean that when factories reopen, the concern over the number of available empty containers for eastbound loading will be a factor as well.

The inability to move cargo in and out of China is leading to global container imbalances – boxes in the wrong places for imports and exports to countries or regions. This situation will likely take several months to resolve once vessels and freight begin moving again in earnest.

For air shippers:

We are fully anticipating that when production resumes in China, there will be a significant queue to quickly get cargo where it needs to be. To this end, it will likely be freighter capacity first and passenger service restored second. Airlines we have spoken with have been giving guidance that the most important thing to do right now is secure space and when the departure time approaches we will be advised of the rate based on market conditions.

TOC takes no pleasure in sharing this information because we understand that companies have already sustained losses with the prolonged closures. But we also have enough experience that protecting space is paramount to negotiating or haggling because we don’t believe shippers will be in a position to do either when manufacturing resumes in earnest.

Next week, TOC Logistics representatives will be in attendance at the annual Transpacific Maritime Conference sponsored by the Journal of Commerce. We will be listening very closely to carrier representatives and economists on what they forecast will happen in the coming weeks ahead.


Coronavirus Update – Thursday, February 13th, 2020

Overnight, news broke from Hubei province that the number of reported cases of the novel Coronavirus spiked sharply – sufficient enough it cost two Chinese politicians their jobs. Reporting in the South China Morning Post states two Communist Party officials were replaced as the number of reported cases spiked ten fold, adding 14,840 new cases to the tally, bringing the total now to 48,206 with 242 new deaths.

The New York Times reports the sharp rise in reported cases illustrates how hard it has been for scientists to grasp the extent and severity of the coronavirus outbreak in China, particularly inside the epicenter, where thousands of sick people remain untested for the illness.
Confronted by so many people with symptoms and no easy way to test them, authorities appear to have changed the way the illness is identified.

As far as manufacturing is concerned, worker shortages, transport disruption, a lack of medical supplies and heavy-handed local officials are all making life difficult for factories – some workers are coming from Hubei, Hunan, Jiangsu and Zheijiang and are being quarantined for two weeks.

According to Reuters, Apple contract manufacturer Foxconn only had 16,000 employees return – a tenth of their total workforce – and have taken to manufacturing two million surgical masks per day for their employees.

Transit times are affected, and for those factories who have been able to resume production, the few number of air and sea carriers operating in and through mainland China portends higher freight rates in the near term. Shortages of specialty equipment such as reefer containers are to be certain in the short term because of the lack of free movement throughout China.

We’re still seeing issues with local truckers that are not allowed to enter other localities. For example in The Beilun District Government of Ningbo, health check authorization has not been granted. Local authorities require enterprises to submit applications for approval to resume work thereby demonstrating their capability in ensuring strict safety processes and maintaining adequate hygiene.

For pickups within Shanghai there is no problem. However, cross province pickups from Jiangsu Province or Zhejiang Province can be problematic as these provinces have restricted road access to local registered trucks only. As we have done in the past week, we are doing our best to work with our trucking companies in these provinces or utilize suppliers’ referred trucking company or suppliers’ own trucks to deliver to Shanghai. Higher charges may apply in these cases as capacity is very tight with production ramping back up.


Market Advisory update – China coronavirus – February 5, 2020

As we continue to monitor and receive information from our partners and vendors in China, note the following news that has been updated today.

We have been advised that road closures not only between cities but within cities are becoming more prevalent. See the two pictures below that show roads being blocked by the authorities.

The barricades are not only to prevent the movement of commercial vehicles such as trucks, but are increasingly encompassing pickup trucks and other passenger vehicles as well. This is not just a case of “trucks can’t move”, increasingly it’s a case of “vehicles can’t move.”

Maersk has announced that their offices in China will be closed through the end of February with employees being allowed to work from home.

Hamburg Süd’s offices are closed through February 17th.

Access to container yards is growing more difficult between blockades and factory closures.

With regards to the availability of air freight, the significant reduction in passenger services to and from mainland China to either the US or other transshipment airports has reduced available lift. It is believed that when factories reopen, the only air cargo options that will be available will be with cargo aircraft until passenger services are restarted.

Transparently, we anticipate that the resumption of business in China and the limited options available for departing cargo will create severe pressure on pricing in a more acute than usual supply and demand environment.

We continue to encourage importers and planners to speak with their contacts in China who are being advised by the local and national governments what the policies will be for re-opening and who know the location and availability of their workers.


 

Market advisory update – China coronavirus – February 3, 2020

The Lunar New Year Holidays have officially drawn to a close in China, however, the risk posed by the coronavirus both inside and outside of China continues to affect the logistics supply chains.

 

We here at TOC understand the worry and uncertainty this is causing as factories and businesses are supposed to be returning from the holidays and resuming operations.

 

The fact is that many factory workers within China move from one place to another within the country to find employment and they travel home twice annually, Lunar New Year and Golden Week. If people are either unable to return because of travel restrictions or there are prohibitions on businesses reopening in the interest of protecting public health, all the world can do is watch and wait.

 

So what do we know that is new after the weekend?

 

Holiday extensions:

 

 

According to a Central Government directive issued on 27 January, the Lunar New Year holiday is extended to 2 February in Mainland China. All companies in Mainland China have been requested not to re-open their premises until Monday, 3 February.

 

The local governments are permitted to adjust the Lunar New Year holidays based on the local situation in the needs of Novel Coronavirus control. As per today, the following municipalities and provinces have announced the further extension of the holidays till 9 February:
  • Beijing Municipality
  • Chongqing Municipality
  • Shanghai Municipality
  • Tianjin Municipality
  • Anhui Province
  • Fujian Province
  • Guangdong Province
  • Guizhou Province
  • Hebei Province
  • Henan Province
  • Heilongjiang Province
  • Hunan Province
  • Inner Mongolia
  • Jiangsu Province
  • Jiangxi Province
  • Jilin Province
  • Liaoning Province
  • Shandong Province
  • Shaanxi Province
  • Shanxi Province
  • Sichuan Province
  • Yunnan Province
  • Zhejiang Province
  • (excluding Wenzhou)
The Lunar New Year holidays are extended to 13 February 2020 in the Hubei Province (including Wuhan) and to 17 February 2020 in Wenzhou (of Zhejiang Province).
 Additional voided sailings:

 

The Journal of Commerce (subscription required) reports that while carriers have so far held back on blanking additional sailings, there is a very high likelihood of this happening.

 

“The final vessels that left Asia before Jan. 25 will begin arriving on the North American West Coast next week, and by mid-February on the East Coast. The trade had already built several weeks of depressed import volumes into their operations in February and March by announcing more than 40 blank sailings beginning Feb. 9. Most of the blanked sailings announced by carriers were scheduled for mid-February until early March.” – Greg Knowler, JOC

 

Maersk Line has announced a waiver of detention and demurrage charges for cargo leaving China from January 27th through February 9th.

 

Coast Guard taking measures for vessels arriving from China:

 

The US Coast Guard announced new US port arrival procedures effective immediately for vessels that have called Chinese ports (excluding Hong Kong and Macau). The incoming vessel must report to the US Coast Guard Captain of the Port on the crew’s health. And, as long as there are no sick crew members onboard, vessels will be allowed to berth normally.

 

Global airlines cancelling flights to and from China:

 

American, Delta and United have announced suspension of services through the end of March to and from mainland China owing to a significant drop in passenger demand. Other European and Asian carriers are taking the same steps.

 

The US government has also imposed entry restrictions to the United States for foreign nationals who visited China.

 

What does this mean for TOC customers?

 

We realize that without workers, factories can’t open. Without flights, we cannot offer hand-carry services. Further, we recognize the public health risk and cannot put our people in harm’s way or risk them being quarantined or prohibited re-entry if we are transporting cargo from China to North America.

 

TOC is working with our carriers and our representatives in China, Hong Kong and the surrounding affected countries to ensure that we are aware of the most current conditions and can take actionable steps to keep cargo moving on behalf of our clients as soon as we are permitted.

 

Please stay in touch with your TOC point of contact throughout this process.

Market advisory update – China coronavirus – January 30, 2020

In our last advisory, we detailed how Beijing has made the determination to officially extend the Lunar New Year through February 2nd while allowing individual provinces to determine whether or not to extend it further or take additional measures. Shanghai, for instance, extended the holiday closures through February 9th and are checking and recording the temperatures of drivers and passengers of arriving vehicles.

As of Wednesday, January 29th, we have learned that Tianjin, Dalian, Qingdao, Xiamen will resume work on February 3rd and Suzhou, Nanjing, Chongqing, Wuhan, Ningbo, Guangzhou and Shenzhen offices will resume work on February 10th

Over the past several days, the measures being taken both within China and by external countries and companies are demonstrating the steps that are being taken to prevent a further spread of the coronavirus.

We must strongly counsel our clients that the information we are receiving is fluid and changing in response to global monitoring of the potential spread and exposure to Chinese and foreign nationals who are within China or have traveled beyond its borders.

  • British Airways has suspended all flights to and from mainland China.
  • United Airlines has cut some flights beginning February 1st for just over a week amid significantly decreased demand and would not rule out further action.
  • American Airlines announced the suspension of flights between Los Angeles and Shanghai (PVG) and Beijing from February 9th through March 27th due to “the significant decline in demand for travel to and from China.”

As far as ocean carriers go, Danish carrier Maersk has a page on their site which they recommend bookmarking that on January 29th advised the following:

“All Maersk operations including Terminal, Warehousing, Depots, Offices and other facilities except Wuhan continue to operate uninterrupted as per usual. Load/Discharge moves at Wuhan port have been suspended until further notice and our customer service teams are currently following up on shipment status with respective customers and discussing alternative transport plans.”

Port, airports, rail and China customs are still operating as per normal in this holiday period , except Wuhan which remains largely locked down. Congestion is expected due to the limited number of trailers available.

TOC Logistics continues to strongly encourage companies to communicate with their suppliers who will have the most current information on working hours and travel restrictions, if any. The significant decrease in flights coupled with the ongoing monitoring for the spread of the virus could potentially impact hand-carry services when factories re-open based on their province of origin.

We will continue to update via market advisories as new information is received, assessed and the impact on supply chains is clearly articulated.

China extends Chinese New Year holiday to curb spread of coronavirus – January 27, 2020

The Chinese government announced today that nationwide the Lunar New Year Holiday has been extended until February 2nd making the first available working day February 3rd.

While this is an announcement from the Beijing leadership, they gave provincial (state) governments the discretion to extend and modify the proclamation, as needed.

Shanghai province, for instance, today announced an extension of the holiday until February 9th. Per a Reuters article shared with us by our Hong Kong partner but not available in English, the primary focus of the Chinese government’s efforts are on ensuring the availability of utilities, medical supplies and the operation of health care services.

For cargo, vehicle movements are being impacted as all conveyances traveling on intercity highways and roadways into Shanghai must stop for inspection and a health check of the driver and any passengers until further notice. The information is also being recorded and body temperatures of vehicle occupants measured.

As this announcement was just made today, it is too early to determine what the planned impact will be on customs, airlines, carriers, port operations and everyone involved in the supply chain for both air and sea cargo. What we do know is that given Shanghai’s status as an arrival and departure gateway for so much air and sea cargo, there will inevitably be delays as factories re-open following holiday closures.

China recognizes how highly contagious and dangerous this virus is. The goal of the government during this health emergency is to keep the virus from spreading, which means reducing large gatherings of people where transmission from human to human is a risk. Understandably, factories that employ hundreds or thousands of people in close quarters is one vector the government is trying to close off to prevent transmission.

We strongly encourage our customers to speak with their factories directly because they will have access to the most current information impacting their workforces.

TOC will continue to monitor news country-wide in China as well as whatever provincial or local steps are taken that would impact manufacturing and shipping. Please continue to reach out to your primary TOC points of contact as we will be communicating information throughout all levels of the company.