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Volume rates surpass capacity from China as manufacturing resumes

The Chinese Government is continuing to stimulate recovery as factories across the country resume normal operation.

Chinese Customs has confirmed that exports from China for the first two months of 2020 have reduced 17.2 percent to USD$292.45 billion (Aus $466 billion).

Major east production provinces and south production provinces are back to normal operations in China and numbers from the TAC Index shows that the price is climbing for air cargo exporting from China.

Freight forwarder Agility Logistics said on its website that China’s air cargo capacity was down 39 per cent in February relative to last year because of the passenger flight cuts

China’s aviation regulator said to South China Morning Post that the number of freighter flights was expected to reach 870 this week, up from 788 in the week starting February 17.

Freight Investor Services said in an update to clients on Monday that intra-Asia traffic was up by 22 per cent over the previous week and cargo pricing on China-to-US routes had reached “abnormal highs”.

TAC Index data shows China-US cargo rates have risen by 27 per cent over the last two weeks to more than US$3.50 a kilogram.

From March 13, commercial travel from the EU to the US due to the COVID-19 outbreak will be suspended for 30 days, however cargo-only flights are not included in the restrictions.

US President DonaldTrump stated in his initial televised address that these prohibitions will not only apply to the tremendous amount of trade and cargo, but various other things as we get approval and “anything coming from Europe to the United States is what we are discussing”.

He later tweeted the restrictions do not apply to goods.

On an earnings call last month, Spencer Schwartz, Atlas Air Worldwide​ CFO said we’re starting  to see the “tremendous demand” and the increase in yields and the factories to get back to work this week.

Atlas CEO John Dietrich said on the same call that this because of the urgency to the market as goods that would normally travel by either ocean or surface transportation, will travel by air in the coming weeks.

“It’s not going to change overnight, when some of the commercial carriers resume service. And looking ahead, I don’t have all of the dates, but some of the commercial carriers have pushed into April before they’ll resume service,” John said.

China Prime Minister Mr. Keqiang Li has announced all the ports need to reduce their charges to assist with recovery.

In some key ports, including Shanghai, Guangzhou and Beijing, the import and export declaration process has been simplified to facility cargo movement and recovery.

John Park, Head of Business Operations at Freight and Trade Alliance (FTA) said the organisation has been in touch with a number of major shipping lines and they have seen improvement in bookings.

John said in an update on Wednesday that the industry should expect to see a return to full sailing schedules by early April  with loads at 90-95 per cent by week 12/13 and trucking capacity in Northern and Southern China ports are back so freight is moving in the region.

“Vessels that have been offline have been used as storage depots for “reefers” due to the reefer plug shortage at Chinese ports – these will now slowly start to be discharged at their destination ports,” John said.

He said due to lack of container movements during the blank sailing period we could see a shortage of equipment at origin ports around the world. This may impact exports especially in the fresh produce field however there is a strong northbound trade and southbound is starting to improve.

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