Shanghai airport terminal closure leads logistics companies to expect cargo delays

Dive brief:

  • Cargo suspensions that began on Friday remain in effect at Shanghai Pudong International Airport after the Shanghai Health Commission reported five new cases of COVID-19 among cargo workers.
  • One of the airport’s terminals, PACTL, has closed due to the new cases, with around a third of flights departing from PVG Airport affected, according to Ligentia. Before the shutdown, Shanghai Pudong Airport was only operating at 33% capacity due to China’s quarantine measures.
  • “It’s still unclear when flights will resume,” said Matt Castle, vice president of air cargo products and services at CH Robinson on Monday.

Dive overview:

Affected cargo flights will no longer leave the airport until the area is considered safe due to China’s “zero tolerance policy against Covid-19,” Castle said. China has strict measures in place to contain the spread of COVID-19, causing strain on the already limited air cargo capacity outside the country.

“In Shanghai Pudong, for example, staff were asked to work for seven days, quarantine themselves in a hotel for seven days, and then quarantine themselves at home for an additional seven days,” Ligentia said. “Due to the departure of staff, long processing times (2-3 times longer than normal) were experienced and some cargo flights took 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 tonnes of cargo per year and “is one of the main cargo hubs in China,” according to ShipHub. Mechanical and electrical products, as well as automobiles, account for a significant portion of Shanghai’s exports in 2020, the city said in a press release.

“The impact of this suspension will cause a serious delay in PVG in the coming days”, SEKO Logistics said on twitter. “Airlines are diverting flights to airports in southern or western China.”

SEKO also said that some freight forwarders are considering alternative export methods, such as shipping by sea to Singapore and by plane from Singapore Changi Airport. Maersk said in a customer review on Friday that it was adding capacity with flights to less affected airports to reduce the impact on customers.

Some cargo flights have already been diverted to Hong Kong, and the closure of cargo operations at the terminal will further increase air cargo rates from China, according to Ligentia.

Air freight rates from China stood at $ 8.10 per kilogram as of Aug. 16, an increase of nearly 6% from a month ago, according to the TAC index, with a market of tight sea freight and high season preparations boosting demand. Asia to North America air freight market is in “critical” status after seeing capacity plummet as spot rates tend to rise, CH Robinson said in a market update freight.

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