Shanghai airport terminal closure leads logistics firms to expect cargo delays

Date: Tuesday, August 24th, 2021
Source: Supply Chain Dive

Dive Brief:
Freighter suspensions that began Friday remain in effect at Shanghai Pudong International Airport after the Shanghai Health Commission reported five new COVID-19 cases among cargo workers.
One of the airport's terminals, PACTL, closed due to the new cases, with around one-third of flights out of PVG airport affected, according to Ligentia. Before the closure took place, Shanghai Pudong airport was only operating at 33% capacity due to China's quarantine measures.
"It is still unknown when flights will operate again," Matt Castle, vice president of air freight products and services at C.H. Robinson, said in an email Monday.

Dive Insight:
Affected freighter flights won't operate out of the airport again until the area is considered safe due to "China's zero-tolerance Covid-19 policy," Castle said. China has implemented strict measures to contain the spread of COVID-19, leading to strains on already limited air cargo capacity out of the country.

"At Shanghai Pudong, for example, staff have been asked to work for seven days, quarantine in a hotel for seven days and then quarantine at home for a further seven days," Ligentia said. "As a result of staff quitting, long handling times (2-3 times longer than normal) have been recorded and some cargo flights have taken off with very little or no cargo over the weekend."

Logistics companies expect delays and longer transit times due to the suspensions. Shanghai Pudong International handles more than 3.1 million tons of cargo annually and "is one of the main loading nodes in China," according to ShipHub. Mechanical and electrical products, along with automobiles, make up a large share of Shanghai's exports in 2020, the city said in a news release.

"The impact of this suspension will see a serious backlog in PVG in the coming days," SEKO Logistics said on Twitter. "Airlines are diverting flights to airports to the South or West of China."

SEKO also said some forwarders are considering alternative export methods, such as shipping via ocean to Singapore and flying out of Singapore Changi airport. Maersk said in a customer advisory Friday it's adding capacity with flights in less affected airports to reduce the impact to customers.

Some cargo flights have already been diverted to Hong Kong, and the closure of the terminal's cargo operations will lift airfreight rates from China further, according to Ligentia.

Airfreight rates from China were at $8.10 per kilogram as of Aug. 16, an almost 6% increase from a month ago, according to the TAC Index, with a tight ocean freight market and peak season preparations driving demand. The Asia-to-North America airfreight market is in "critical" status after seeing capacity drop while spot rates are trending up, C.H. Robinson said in a freight market update.


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