Shanghai Airport Facility in COVID lockdown - Cargo Backlog Expected
On August 20th several positive COVID cases were discovered at the Pudong Air Cargo Terminal (PACTL), forcing a pause in all ground handling, customs, and airfreight services in Shanghai. PACTL is one of two cargo terminals at the Shanghai Pudong airport.
No official statement has been issued by the airport authority or PACTL, and there is great deal of conflicting information circulating in the Shanghai cargo community. The duration of the shutdown is uncertain but could be more than a week based on how authorities have handled similar cases at seaports and other logistics hubs.
The timing of the closure throws another wrench in supply chains already stretched thin by ocean and airfreight capacity shortages and extensive shipping delays as the peak export season kicks in for the holidays. All-cargo carriers in Shanghai have faced delays and canceled flights for more than a week because of airport staffing shortages that occurred when authorities imposed strict COVID protocols to prevent the virus from spreading.
Pudong Airport is the largest cargo airport in the mainland, with cargo and mail transportation volume of 3,686,600 tons in 2020. With large cancellations of flights anticipated, this will undoubtedly lead to higher air freight rates as shippers desperately try to find alternative ways to ship their goods.
Air cargo faces additional China supply chain disruption
New Covid quarantine rules for cargo workers at key gateways in China continue to put air cargo supply chains under pressure. To contain outbreaks, lockdowns and stricter quarantine measures have been put in place and are having an impact on cargo operations at both airports and seaports. Pickup and delivery services, as well as air cargo operations have seen the most disruptions, with 15 airports identified as having been affected.
Nanjing Lukou International Airport and Yangzhou Taizhou International Airport were both temporarily closed earlier in August. Beijing airport had been operating at around 43% capacity, Shanghai Pudong at around 33% capacity and Xiamen Airport (XIN) at 66%. Each airport has cancelled hundreds of flights.
The situation is likely to cause airport congestion and delays and trigger further rate increases due to lost air cargo capacity. Major airports in China have restricted operations to undertake virus disinfection work and as a result, shortages in flight capacity and staff have been reported. Several freighter-rotations have been cancelled and passenger flights have been withdrawn as flight crews could not stay overnight due to quarantine regulations.
These challenges have had an immediate impact on capacity and have been driving up rate levels. Some specific areas in Asia are more impacted than others, however, the overall market situation remains difficult to say the least.
There are options – from premium carriers, alternative routes, and priority/guaranteed services. Let us know the challenge you are facing, and we can find the right solution for you. Reach out to tmarano@laufer.com