Coronavirus takes a toll on cargo demand from China

Despite the cutback on flights to, from and within China following the outbreak of the new coronavirus in Wuhan, similar slumps in cargo demand out of china mean current capacity is more than able to keep up with existing demand. However, the need for supplies to support relief efforts in the Country has seen a recent “surge in airfreight demand into China” that airfreight has not been able to quite keep up with, according to SEKO Logistics’ chief growth officer Brian Bourke. Freighter operations into China from Hong Kong have largely continued as normal, confirmed Hactl’s executive director Vivien Lau to Air Cargo World . “Freighter services from Hong Kong are largely unaffected and operating on most major routes, and additional charter capacity can be added quickly if there is demand,” Lau said. “Any cancellation of passenger flights is not likely to present a problem to the air cargo industry and its customers in Hong Kong.” With flight operations currently restricted in some Mainland China airports, Hong Kong “could conceivably be used as an alternative route for some mainland export cargo,” Lau said. The Hacis SuperLink China Direct trucks are currently scheduled to resume operating on Feb. 10, in line with Guangdong province’s scheduled end to the extended Chinese New Year. “This service provides convenient express RFS links from nine depots on the mainland.” SEKO’s Bourke confirmed the use of Hong Kong as a staging point for cargo moving into China, who said the forwarder is seeing a buildup of goods moving into China as last-mile delivery capabilities are significantly reduced. “We are looking at multi-modal [combinations of] ocean and air for clients that will need to move out of China via ocean and then use airfreight into the U.S. from other Southeast Asia countries,” Bourke told Air Cargo World . “We are able to send relief and medical supplies into Hong Kong, and then truck into China.” In line with Lau’s statement on largely unaffected cargo operations during the Lunar New Year, several carriers are promoting their continued service into China. Sri Lankan Airlines’ GSA today advertised widebody cargo capacity available into Beijing (PEK) and Shanghai (PVG) from Sri Lanka’s Bandaranaike International Airport (CMB). Russia’s Aeroflot this week also provided an updated schedule of regular flights into mainland China from several Baltic airports with connections in Moscow (SVO), and continuing flights to PEK, PVG and Guangzhou (CAN). While the industry is adding capacity where needed, demand seems to be headed for a decline. The industry and government response to the coronavirus outbreak in China is already contributing to a major slump in commerce in the country. While the early stage of the outbreak coincided with the Chinese New Year, a traditionally slow time for cargo flows in China, that holiday period was formally extended by the government to Feb. 2 in mainland China, with companies advised to keep their operations closed until Feb. 3, in an effort to mitigate the effects of the virus. Several municipalities and provinces extended the holiday even further, including Shanghai, where the holiday is scheduled to run through Feb. 9. Hubei Province, where Wuhan is located, has extended the holidays through Feb. 13. Companies with operations in China are also implementing their own measures to protect their employees. Tesla, Toyota, General Motors, Honda, Nissan and Volkswagen are among the automakers with manufacturing in China, Bloomberg said. Wuhan, a major Chinese automotive hub, is also thought to be the epicenter of the coronavirus outbreak. Many of the affected automakers are extending Lunar New Year shutdowns, with the impact on production expected to be double-digit percentage declines year over year. Other industries are also affected, with multinational companies, including Starbucks and McDonald’s, closing locations in China. The full effect is still difficult to assess with the extended Lunar New Year holidays, however. “It is not possible yet to assess what impact the situation may have when traffic levels return to normal,” Hactl’s Lau noted. For its part, SEKO is preparing for the end of the holidays when businesses begin to reopen, “as that is when there will be a surge in demand without capacity catching up quite yet for outbound [traffic] from China,” Bourke said.

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