Those persons, cities, and countries feeling the impact of the novel coronavirus outbreak are in our thoughts and we wish for a quick solution and an end to the associated suffering.
The Bottom Line Up Front:
- The crisis is complex, dynamic, and uncertain in how air cargo supply and demand will develop.
- It’s highly recommended for shippers to get as detailed forecasts as possible for pre-planning.
- Communicate what, when, and where the cargo will be ready and needed internally, as well as externally to logistics providers.
Due to low passenger demand and government-imposed restrictions, a significant number of passenger flights in, out, and within China have been canceled. Depending on the operator and situation, future operations may be suspended for anywhere from a week to ten days to potentially as long as early April.
These suspensions to passenger flights can and do have an impact on cargo, as most of these flights, in addition to the normal baggage they carry, haul all sorts of air cargo to places around the world and are often used to feed larger airline networks at their hubs outside of China.
This potential impact could be seen to all parts of the world and in particular, intra-Asia cargo and Asia-Europe air cargo trade lanes, both of which rely heavily on wide-body passenger flights to move air cargo. Less potentially impacted by passenger cancellations is the Transpacific trade lane, although, with its reliance on freighter aircraft, there could be potential impact seen there as well. As the outbreak coincides with the Lunar New Year holiday, a normal slowdown in demand for air cargo from China that occurs is now being extended.
As a result, air cargo freighter operators have canceled normal operations beyond their normal holiday cancellation time frames due to the low demand for air cargo capacity ex-China. Great uncertainty exists with regard to how quickly air cargo demand from China will return on a large scale.
Another impact on supply chains is on cargo wishing to fly into China from the large markets of the United States, Europe, and the rest of Asia. The capacity from these markets into China, and the economics supporting it, are highly dependent on there being cargo demand outbound from China.
It is that demand ex-China that is needed in order to justify freighters to begin flying their scheduled services again. There are also many around the world looking to help provide supplies and aid to China.
As one can see, there are a lot of moving parts to this complex equation. In order to navigate this situation and mitigate impacts to supply chains, forecasting and pre-planning become essential.
Planning considerations include:
- What freight will be ready to go?
- When will it be ready?
- Where does the freight need to be and by when?
This is not as simple as it sounds, with the uncertainty surrounding people returning to work in factories, airports, warehouses, and not to mention, limitations on transportation of people and goods via truck and rail within China. This uncertainty can have an impact on both cargo wishing to export from China, as well as the cargo being imported into China, which needs to be handled and delivered to the end consignee.
Given all of this, communication on all levels internally and externally is essential. Ensure your internal team is consistently assessing the status of your cargo and your service providers are providing the most concrete details possible.
Expeditors has over 177 full-service locations including over 40 in China working together to take in the detailed forecasting and planning requirements of our customers and execute solutions to best meet their needs.