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Customer Advisory on COVID-19: Updates from Greater China

We are closely monitoring the Novel Coronavirus (COVID-19) situation. An update on how the quickly evolving situation may affect our operations. Contact your local DB Schenker branch for detailed information.
 

Feb 20, 2020

Since the last advisory on Feb 17, there have been no significant change in status on the situation in Greater China. We continue to make efforts towards feasible alternative solutions in order to prepare for market rebound. Please continue to engage with your account managers on your latest plans and projections.


Personnel Updates:

As far as we are aware, there are to date no reports of COVID-19 infections among our DB Schenker workforce.


Operational Updates: 

Most of our offices in Greater China have resumed work with some still under constrained capacities. Tianjin and Wuhan continue to remain closed following the regulations from the local authorities.

Status details can be referred to from the dashboard below:
 

Market Updates:

Air Freight

  • The market is experiencing 40% capacity shortfall with passenger flight schedules severely disrupted and freighter flights reduced.
  • Carriers are currently facing manpower crunch due to operating with double crews for split-shifts.
  • Truck resources are limited for pre-carriage and on-carriage with approx. 30% of drivers available.
  • PVG CFS under restrictions since the industrial park does not allow drivers who have been to 20 of the listed areas/city in the past 14 days to enter the area. To ease the backlogs and delays, PVG drivers are on standby to support trucks that can enter and unload.
  • We have been working on tailor-made solutions for our customers to resolve the backlogs as well as prepare for the measured recovery. Please contact your account managers for more details.
  • We have already set-up flight operations and extra capacity to support customer needs:
    Round trip flight operations between PVG to FRA with departure ex PVG on Thursday and Sunday every week.
    Flight operation from HKG to FRA will start from March 8 with departure ex HKG on Thursday and Sunday every week.
    Starting this week, extra space on commercial carriers ex PEK to Europe will be available.
    Extra capacity ex CGO on standby basis (3-4 day activation).
  • Various dedicated customer flight operations have been established and our team is on standby to support with solutions for our customers’ shipping needs.

Ocean Freight

  • Due to the flat market demand, carriers pull out capacity by blank sailings in Feb.
  • Vessel space for export is sufficient, container trucking resource is limited, although it is gradually recovering from this week.
  • Import shipments are threatened by rising rates and lack of equipment in overseas POL.

Land Transportation

  • Jiangxi, Guizhou, Zhejiang announced the cancellation of the control points set-up on highways within the province (control points only on cross-province highway gates and in Wenzhou city). Jiangsu, Fujian, Liaoning reopens some of the gates and service stations which were previously closed.
  • Land bridge: Ping Xiang border is recovering gradually. Working hours extended to 8:00-19:00. Daily limitation of 200 trucks in and out via Ping Xiang border. Estimated Customs Clearance lead time is 1-2 days.
  • Multi-modal Rail West Bound after recovery, the ETDs of 1st departure are as follows:
    Chongqing: Feb 19, Feb 22
    Chengdu: flexible
    Xi’an: Feb 23
    Yiwu: Mar 3 (to be confirmed)
    Hefei: Feb 19, Feb 20
    Shenyang: Feb 22
    Suzhou: Feb 23
    Wuhan: Suspended
    Zhengzhou: Suspended
  • Leveraging our leading solutions in block train services, on Feb 17 we successfully completed a cargo delivery by multi-modal rail transportation, connecting CR Express with domestic cargo express train. It took 16 days to deliver the goods from DUISBURG terminal in GERMANY via CHONGQING to CHANGSHA rail terminal in CHINA, which saved four days compared to normal operations.

Contract Logistics

  • No status update since the last advisory.

Since the last advisory on Feb 13, there have been no significant status changes on the situation in Greater China. We continue to stay close to the developments in the markets and have been working with our partners and stakeholders to jointly determine feasible alternative solutions in order to prepare for the slow and measured recovery. Please continue to engage with your account managers on your latest plans and projections.


Personnel Updates:

As far as we are aware, there are to date no reports of COVID-19 infections among our DB Schenker workforce.


Operational Updates: 

There are no significant changes in status since the Feb 13 advisory.

  • Most of our offices in Greater China have resumed work with some still under constrained capacities. Tianjin and Wuhan continue to remain closed following local authority regulations.
  • Our Greater China team has also been working on the dashboard below to help provide situational clarity and content structure for your convenient reference.


Market Updates:

Trucking capacity remains the key factor across products. The overall situation in the Southern parts are progressing and recovering at a faster pace than the other regions. Traffic authorities are slowly easing restrictions and facilitating resumption. Bottlenecks remain in containerized trucking resources. Our GC Land Transport team has created a daily overview of traffic restrictions, controls and specific developments that significantly affects the accessibility to highways, alternative routes, border crossings and so on with the highlights of possible hotspots, delays and congestion.

Air Freight

  • Further to the flight operations which have already been set-up for the following weeks, we have secured a number of flight operations, tailor-made for our customers, on either round-trip or single flight basis.

Ocean Freight

  • Customers are strongly advised to make early bookings as well as confirm trucking resources when making plans and arrangements to ship.

Land Transportation

  • Our teams are calibrating transport options to include domestic rail, barge operations and other multi-modal combinations to help customers with their needs. Please contact with your account managers to learn more.

Contract Logistics

  • No updates in status since last advisory.

The World Health Organisation has officially renamed the novel coronavirus (previously 2019-nCoV) to COVID-19. 

Since the Feb 11 advisory, there have been no significant developments in Greater China. Expectations remain moderate and prudent. Activities are very gradually picking up at varying rates and challenges mentioned earlier in the week persist. Our team has been working on resolving critical issues, stabilising situations, and planning ahead. We expect the following weeks to progress at a measured pace.

Capacities in the market remain volatile, with extraordinary conditions affecting Air Freight and Land Transport. We stress the importance to engage closely with your account managers to obtain the most up-to-date plans and projections, so as to prepare for the changing market conditions in the near term.


Personnel Updates:

As far as we aware, there are to date no reports of COVID-19 infections among our DB Schenker workforce.
 

Operational Updates:

There are no major changes in status since the Feb 11 advisory.

  • Over 2/3 of our branch offices in Greater China have resumed work in varying capacity. For the remaining branch offices which are still closed pending local authority approvals, arrangements have been made for working remotely in preparation of and to support resumption of our operations. This excludes our offices in Wuhan and Zhengzhou, which continue to remain closed until further notice. *BREAKING NEWS: Wuhan Government has announced the extension of work closure through Feb 21.*
  • Over 2/3 of our Contract Logistics sites in Greater China have started operations to serve our customers in varying capacity as customer operations and production start to pick-up. For the remaining Contract Logistics sites, which have yet to be given approval to resume operations, we are working closely with local authorities and customers to obtain approval as soon as possible. We are proactively working with stakeholders and partners to resolve labor shortage issues in certain locations. This is a common challenge facing companies across the supply chain in the China market.  

Should you require the status of specific sites, refer to the information table from the previous advisory.


Market Updates:

Key Highlights:


Air, Contract Logistics

  • No new updates
     

Ocean

  • Carriers are taking a conservative position on the situation and are still pulling out sailings for the first half of March. We continue to monitor the situation and its impact going forward.
     

Land Transport

  • 45% of logistics parks in Mainland China have reopened. The capacity remains low.
  • As the impact of Road transport pervades not only domestic/cross-border distribution, but also pre-carriage and on-carriage, our GC Land Transport team have put together a daily overview of traffic restrictions, controls and specific developments that significantly affects the accessibility to highways, alternative routes, border crossings and so on, which highlights possible hot spots, delays and congestion. These updates are available through your account managers, should you wish to find out more.

With regard to workforce deployment constraints, fulfilling pre-conditions for the resumption of work (due to shortage across the board for hygiene consumable stock), additional checks / audits, and administrative backlog by the authorities, tactical challenges remain in the foreseeable days ahead.  

We are closely monitoring the situation to adjust and configure available capacity and resources optimally and to provide viable work-around solutions for all our customers who are facing a high degree of challenges and complexity in the resumption of operations.

As the different provinces and industry ecosystems re-establish their production capacities, we are ramping up to match transport capacity and readiness. Transport capacities are not expected to recover at the same rate as the market, particularly in Air freight, where the resumption of passenger flights is still uncertain. Please contact your account managers regarding detailed plans and projections to jointly design a viable solution for your business requirements and risk mitigation.
 

Personnel Updates:

As far as we aware, there are to date no reports of nCoV infections among our DB Schenker workforce.


Operational Updates:

Applies to office and Contract Logistics warehouses.

DB Schenker offices in Greater China: Open Status in the week of Feb 10


Market Updates:

Following the previous advisory dated Feb 9:

Air

  • Certain flight operations have been set-up for the following weeks and we have additional capacity to work on solutions based on customer demands.
  • Truck resources supporting air freight are restricted in the East, West and North with approximately 30% of resources available. Based on current forecast, it is adequate for now, however there is a risk that truck availability will not increase proportionately resulting in shortage going forward.
  • No shortage of trucks for HKG / South China cross border traffic.


Ocean

  • Container trucking resumes in Guangdong province, including Shenzhen, is around 90% of normal capacity. The other cities remain below 30% of normal capacity. Ningbo CFS (for consolidation service) has received approval from authorities to resume.


Land Transport

  • Hefei and Zhengzhou have announced that logistics companies (freight, e-commerce and warehousing operators) servicing the manufacturing industry will be able to resume work on Feb 17. More than 85% of public logistics parks remain closed nationwide with cross-province LTL service suspended.
  • Rail CFS in Shanghai, Shenzhen, Xi'an, Chongqing is open from Feb 10.
  • LANDbridge South East Asia, Pingxiang border allows only very limited export and import trucks to cross. The average wait time to cross the border is 4 days. 


Contract Logistics

  • Greater SHA area (incl. Shanghai, Taicang, Kunshan) started to implement stricter restrictions on external population. Entry for persons without employment proof and residence permit is prohibited.
  • Customers are facing large challenges on transportation fulfilment, causing warehouse congestion due to an overflow of cargo for dispatch.  


Congestions and delays are a certainty over the course of this week. We are making every effort to resume work across our entire Greater China network as soon and as safe as possible.

Operational Updates:

Chinese officials and companies have targeted Feb 10 as the date to resume work in much of the country. Companies will in most cases resume limited business operations and will not be operating business-as-usual.

We are proactively working with local authorities to, where necessary, accelerate approval of applications and negotiate temporary work arrangements where possible. We are in constant communication with our supply chain partners to optimize the deployment of available labor resources. We are making every effort to maximize capacity to support customers’ demand, production and consumption as it begins to ramp up.

Varying levels of local regulations and restrictions on movement are inevitably impacting upstream and downstream operations and processes. This situation affects operations, transport vendors, carriers / airlines and significantly reduces the ability of OEM / factories to resume normal production. In general, China-based enterprises are facing the following challenges:

  • Additional and stricter requirements for work resumption: Local authorities require businesses to submit applications for approval to resume work, enterprises are requested to demonstrate capability to ensure strict safety processes, maintain adequate hygiene consumable stock, ongoing reporting and audit requirements.
  • Backlogs in processing government permits to resume work: Further to the above, administrative backlogs have inevitably occurred due to the volume of requests.
  • Labor shortage: Most local authorities have imposed a mandatory 14-day quarantine period on people returning from a different province, limiting labor capacity and requiring recalibration for a constrained workforce.


Revised Operational Updates:

Applies to offices and Contract Logistics warehouses.

DB Schenker offices in Greater China: Open Status in the Week of Feb 10


Market Updates:

  • Air, Ocean, Land transport: Information from the previous advisory dated Feb 7 remains valid for Air, Ocean, and Land transport. With the constraints in workforce availability, especially for drivers, we expect bottlenecks across all transport products, including pre-carriage and on-carriage.
  • Contract Logistics: Where possible, our Contract Logistics operations will resume normal work on Feb 10. Due to backlogs in permit applications and labor shortages, many operations will have capacity constraints, and in some cases remain closed in the coming days. Details and contingency plans are being discussed directly with individual customers where necessary.

We are making every effort to resume work across our entire workforce as soon and as safe as possible. Delays are expected over the course of the week commencing Feb 10 and we will increase the frequency of our updates to keep you informed of the latest developments.

Personnel Updates:

To date, there are no reports of Coronavirus infections among the DB Schenker workforce. Precautionary measures are in place for all our sites and offices. We continue to enforce strict discipline in self-quarantine, temperature checks and monitoring efforts, as well as maintaining a sanitized workplace for employees. We urge all stakeholders to be vigilant and elevated hygiene practices.


Operational Updates:

Almost all DB Schenker offices in Greater China will resume work on Feb 10, with the exception of the offices in Tianjin, Wuhan and Zhengzhou, which will follow regulations from the local authorities’ to extend the postponement of work.

Apart from the mandatory 14-day quarantine requirement for people returning to work from Hubei Province, local authorities have imposed stricter quarantine requirements on external population returning to work from provinces outside of Hubei and could be subjected to 7 – 14 days of self-quarantine. We foresee that staff capacity recovery, especially for our blue-collar workforce may potentially be impacted, but is still manageable in the week of Feb 10.

Where local government regulations permit the resumption of work and where circumstances allow, we will be able to adjust and plan adequate resources to respond to customer demands.


Market Updates:

Below are the market updates as at Feb 7.  Following the resumption of work from Feb 10, we anticipate there will be further changes as we continue to monitor and adapt to the situation on site.

  • Air: Capacity is heavily impacted out of China for the next week. The market is missing a total of around 4000 Tons of capacity per day.
    DB Schenker in Greater China is ready to support your shipping needs based on available capacity on our allotments / flight operations in / out of China. To do so, we need to receive as many details as necessary, such as cargo readiness / shipment details / destination and required arrival time. Our specialists will work to provide the best possible solution.
  • Ocean: In the week of Feb 10, carriers have reduced 55% capacity to Europe and 30% capacity to U.S, via blank sailing program.
    Majority of CFS in mainland China remain NON-operational until Feb 9. Due to additional blank sailings, carriers will undoubtedly have capacity crunch and equipment shortage challenges starting March onwards from Europe major ports to China. GRI or PSS on Europe Eastbound are expected from March 1st.
    In the week of Feb 10, carriers offices including Maersk, CMA, Hapag, ONE will continue with ‘working from home’ policy.  However, operations are not expected to be impacted.
  • Land transport: General forecast for the week of Feb 10 
    Domestic trucking resource shortage of up to 70% driver shortage due to the 14 days home quarantine policy; More than 80% of logistics parks of mainland China will remain closed until Feb 10;
    LANDbridge cross border trucking port closed or under strict limitations i.e. Pingxiang, Khorgos.
  • Multimodal Solutions (China Europe Rail): West-bound train departures delayed to the week of Feb 17. 
    East-bound train arrival with high risk of delay on-carriage due to lack of resources and road restrictions. (Certain province/city limited to only local trucks being allowed entry). 
    Rail container yards Shanghai, Shenzhen, Chongqing remain closed until Feb 10 or up to further notice.
    Capacities for pre+oncarriage/trucking in China are massively decreased to 10-30% due to truck driver shortage for next two weeks, while alternative solutions are explored.
    Chinese border crossing stations with Russia, Mongolia and Kazakhstan are open for cargo trains without any issues.

A surge in demand is expected when factories re-open next week in different Areas with anticipated resource shortage, leading to higher cost of domestic trucking.

  • Contract Logistics: Generally, all our warehouse operations will resume in the week of Feb 10 with approximately 75% workforce capacity due to further restrictions and strict quarantine procedures imposed by local authorities.

In some provinces/municipalities, local authorities require companies to submit application to resume work on 10 Feb, and we have filed the applications as required.

Operational Updates:

Taiwan and Hong Kong are business as usual with no major disruption.Almost all Mainland China cities and provinces have extended the postponement of work till Feb 9 or thereafter, with the exception of Beijing, Chengdu and Urumqi which have commenced work on Feb 3. Here, we would like to stress that health and safety is of utmost priority. Even in cities where such postponement is not imposed by regulation, we maintain a strict policy of adequate essential staff and skeletal shifts only.Most of our staff from various Mainland China branches are either working from home or with skeletal crew on duty. Government emergency control measures are NOT likely to change during week 6 (Feb 3-9), but we will continue updating on new developments should there be any changes. 

Where local government regulations permit the resumption of work and where circumstances allow, we will be able to adjust and plan adequate resources to respond and support customers’ needs.


Market Updates:

  • Air: Majority of Airlines have cancelled their passenger flights to / from China. Freighter flights which were cancelled over CNY have similarly extended the period of cancellation through Feb 10. Valid freighter flights also have alternate crews to avoid having extended layovers longer than necessary in China.
    There have been news reports indicating that the U.S is considering flight bans for aircrafts flying directly from China. We anticipate that capacity will be severely impacted if this comes into effect; further adjustments will be forecasted over the coming weeks. Some countries have already suspended flights to / from China completely. Disruptions in supply chains are expected, especially for the period when factories resume partial operations.
    Our HKG / Taiwan offices have been activated as alternative gateways and are ready to support! (subject to traffic restriction policies from the authorities and limitations of reach from origin to the alternative gateway). Notwithstanding, we continue to explore other feasible solutions to provide best-case options for our customers.
  • Ocean: More and more carriers have also announced blank sailing towards China ports.
  • Land transport: Due to the control of Pingxiang Port (China-South East Asia), LANDbridge services are suspended. Russia Border Port (China-Russia) cross border trucking services are also affected, though an alternative solution via Alashankou (Kazakhstan) is currently being explored.
  • Contract Logistics: Our TWN and HKG warehouse resume work under normal capacity. For other CL sites, our operations are affected by a combination of regulations imposed by local government authorities. We continue to support customers’ needs wherever regulations allow and employee safety can be assured.

Our Business Continuity Plans (BCP) are available to suit the varying needs of all our customers and stakeholders. As always, our network of account managers will work closely with you, should you require more specific and tailored measures under the circumstances.  

We stand ready to mobilize our transportation capacity, and together with our customers and partners, support all efforts of epidemic prevention and control and expedite all shipments of critical emergency necessities to the affected regions.
 

Personnel Updates:

To date as far as we are aware, there are NO reports of Coronavirus infections among our DB Schenker workforce. We continue to take the necessary measures and enforce strict discipline in self-quarantine, temperature check and monitoring efforts, as well as sanitizing the work environment for employees. We also urge all stakeholders to maintain continued vigilance and elevated hygiene practices.


Market Updates:

The situation remains very dynamic and volatile. We would like to share with you the following information to the best of our knowledge, so as to help provide a clearer picture of the situation on the ground.

  • Air:  Flights operating to and from Hubei are cancelled. Flights which were originally cancelled for CNY holidays are likely to remain cancelled for the extended holiday period.  Majority of Pax flights cancelled or drastically reduced services to China. Freighter carriers announced heavy cancellations for next week Feb 3-9. Some of the airlines which have made these announcements include CX, UA, BA, LH, AA, Cargolux, and others.
  • Ocean: China offices of several shipping companies’ have announced only skeletal staff shifts for their offices during suspension of work. It is expected that there will be difficulty in physical container pickup and delivery, heavily impacted by domestic road transportation disruptions.
  • Land transport: Majority of the Network/Line-Haul Trucking companies have advised that they will resume work after Feb 9. However, we expect that overall capacity will go no higher than 40%.
  • Contract Logistics: CL operations are affected by a combination of regulations imposed by local government authorities. We continue to support customers’ needs wherever regulations allow and employee safety can be assured.

We are fully engaged with local authorities to ascertain and understand the legal boundaries within each area of the Greater China. We are ‘all-hands-on-deck’ ready to fully support your business with minimal disruption in the coming weeks and months, during this unparalleled event which we all must work closely together. 

In the meantime, we are calibrating our Business Continuity Plans (BCP) to suit the varying needs of all our customers and stakeholders, in order to optimise arrangements within these new regulations. As always, our network of account managers will work closely with you, should you require more specific and tailored measures under the circumstances.

To date, the current Novel Coronavirus outbreak has only limited and regional impact on DB Schenker’s business operations to date. Chinese authorities have extended the New Year’s holiday in the country until Sunday (Feb 2), which means our offices and operating sites remain closed. We will follow the governmental guidelines for restricted handling of shipments within China after the holiday period.

We also acknowledge the decision by authorities in parts of China to suspend business operation until Feb 8-13, depending on the region. Several air freight carriers have suspended direct connections to China, which can limit our capability to fulfill air freight operations. For the time being, seaport operations are not restricted, however land transport by truck faces restrictions and closer monitoring. In addition, we must expect difficulties of workforce to return to their workplaces after the Chinese New Year break.

Considering these limitations for transport services into China, for the time being we will ask our customers for a written confirmation that the consignee is authorized to operate and receive goods at the destination. Thank you for your understanding and cooperation to ensure smooth operations during this exceptional situation.