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Customer Advisory COVID-19 Global Update

October 27, 2020

Please find here the newest edition of our COVID-19 global customer advisory update. Every other week this update will give you up-to-date guidance and orientation over all business areas and all geographies.

The 24/7 newsfeed on our website offers additional links and downloads supporting the topics of this document. Please visit: 24/7 News Update

Our customer teams remain continuously up to date about the evolving situation. Please continue to be engaged with your DB Schenker Account Managers on your latest plans, prices and projections. They will invest the utmost effort to support your business with corresponding solutions.

Global Market Updates

  • Global

(Oct 27, 2020) - Peak Season is in full swing heavily impacting the global air cargo market. Market demand is increasing across all regions and impacting the spot market and capacity situation. Predictions this year have been quite different compared to previous years as the market is already in a volatile situation due to limited flights and capacity available as a result of the airline fleet and passenger flight cancellations. This now has led in the last weeks to an even stronger increase in capacity demand as supply remains overall limited. The extension of charter flight operations and high utilization of freighter flights is leading to a situation where additional charter capacity is somewhat limited.

While global trade has recovered across many verticals and even leading to year-on-year increases in some industries, the capacity situation is globally approximately -20% below previous year according to latest data from Seabury Consulting by Accenture. The next couple weeks are expected to reach similar situations as experienced in 2017 and April / May 2020 when overall shortage of aircrafts and crews limited further capacity supply and flights. The impact could even be significantly more severe due to travel restrictions and quarantine measures for crews based on local regulations.

Especially in China we are already observing slightly longer waiting times at the airport terminals due to increased demand and PPE demand returning to the market as the COVID-19 situations across many countries is more critical with increasing cases being observed.

The air cargo market therefore is not only predicted to be challenged by a tough peak-season, but likely to be impacted also in 2021. The industry will be required to support a global distribution of a possible COVID-19 vaccine which is estimated to require some 900 flights of 747-freighter aircraft. This additional demand is already foreseen to require airlines shift flights and capacity from certain trade to the markets with the major demand in a first wave of a vaccine.

Our console charter flight schedule now includes the following flight operations:

➢ Europe – China – Europe: 4 flights per week (B747-400F)
➢ Hongkong – Europe: 2 flights per week (B747-400F)
➢ China – USA: 3 flights per week (B747-400F)
➢ Europe – USA – Europe: 3 flights per week (MD11F and B747-400F)
➢ USA – Australia: 1 flight per week (B777F)
➢ Europe – India – Europe: 1 flight per week (B747-400F)

  • Europe 

(Nov 3, 2020) - In response to the tightening of capacity, we have expanded our air charter operations.

Our new “global flight operations programme” connects Beijing, Shanghai, Zhengzhou and Hong Kong to Chicago and Frankfurt ten times a week with exclusive full charter flights. Since air freight capacity remains highly impacted due to international passenger flight cancellations, our new offering creates reliable cargo options exporting from China. In China, the majority of the manufacturers have recovered to normal. No expectation for passenger flights and belly capacity to return to the market within the next 12 months.

Especially high-tech firms are now increasingly utilising airfreight on the transpacific trade lane as they try to meet demand and healthcare demand for medical equipment remains at a very strong level considering the COVID19 situation globally with increases in COVID cases in most major economies and across the continents.

(Oct 27, 2020) - All offices remain in full operation with access to terminal handling and ground transportation. All our European hubs deliver import and receive export freight with no backlogs recorded towards the weekend. Operationally, our linehauls to and from the hubs are running as scheduled. In some areas, our cross-border trucks might experience some minor delays.

  • Asia Pacific 

(Oct 27, 2020) - There are no significant updates operationally, status remains unchanged.

Logistics and Transport remain classified as essential services and hence are NOT affected particularly. Though resurging COVID-19 infections are evident and tight controls remain in some countries across APAC, our air freight operations remain stable and available to support customer needs. Delays are expected in customs clearance and transportation as lockdowns in some countries affect availability of workforce, including ports, airports, etc. Alternatives to move / transport cargo via other gateways / routes are established. Customers may contact the respective DB Schenker representatives for support or solutions if required.

As APAC countries are opening with the majority allowing manufacturing activities, capacity is expected to remain volatile. We remain vigilant in monitoring the situation, to mitigate events with potential impact to operations.

➢ We also have put additional charter programs (such as for Intra-Asia SG – IN and others) in place. Do get in touch with your DB Schenker Account Managers for further details.

  • Middle East/Africa 

(Oct 27, 2020) - Overall, the air freight operations in the countries remain uninterrupted even as Oman, Kenya, and South Africa slip into partial curfew. We continue to serve our customers. Our regional and global preferred carriers are seen to gradually increase the frequency of passenger cargo flights.

Situation

Country

No operational restrictions for air cargo business

Qatar, Kenya, Oman, South Africa, Bahrain, Saudi Arabia, UAE, Egypt

Restrictions for operational air cargo business

➢ Please contact your DB Schenker Account Manager for more information on additional routes.

  • Americas 

(Oct 27, 2020) - USA – China

➢ Sufficient capacity for USA exports to key destinations in China. Large number inbound scheduled freighter flights and charters continue supporting USA exports providing capacity to meet market demands on the return leg.

➢ Rate levels are relatively low but remain above pre-COVID-19 levels. Inbound volumes particularly from China remain high. Market demand ex China is strong and expected to be even stronger with more capacity constraints after Golden Week (1 - 9 Oct).

USA – Asia (excluding China)

➢ Destinations with tight capacity continue to be Australia and India from all USA origins. Korea and Singapore with tight capacity and some backlogs from the USA eastern gateway cities of JFK, ATL and MIA. Market pricing moderating from prior highs, but still well above pre-COVID-19 levels.

➢ Flight operations via the DB Schenker Euro Hub in FRA – BOM and Part Charter capacity from ORD – SYD are supporting these high demand destinations.

➢ Outbound USA to OZ in particular is tight.

USA – Europe

➢ Further charter flights have been launched with the Global Flight Operations Program to provide additional air cargo capacity to Europe. These flights are connecting Atlanta and Chicago with Frankfurt, Germany and other surrounding Central European markets. Please contact your DB Schenker sales representative for more details.

➢ Market demand is moderate but growing. Market pricing has stabilized after some downward movement during the summer. As countries continue with ‘reopening’ renewed demand with its upward pricing pressures is anticipated.

USA – Latin Am / Latin Am to Europe and APAC

➢ Intra-Americas: Market demand is moderate with sufficient freighter capacity to most destinations from the USA to Latin Am.

➢ South America exports to other regions: Sufficient capacity but market pricing much higher. Some passenger flights returning, but far from previous frequencies and not providing much additional capacity. The principle carriers for the region have declared chapter 11 bankruptcy (re-organizing). Services continue but with some minor flight scheduling disruptions / delays, which are more pronounced into Peru, Chile and Bolivia as noted.

  • Global

(Oct 27, 2020) - Equipment availability remains very tight all over Asia with critical stock inventory in CN, VN, TH, but also India, Korea as well as Chinese inland places. Carriers push utmost empty positioning activities ex Europe and North America. At the same time, rates in all main trades remain high – partially at record high levels – with chances that further increases might materialize during November, via a rate increase, repeated rate increases or increased Peak Season Surcharges. Carriers apply very strict yield management and prioritize equipment release and space accordingly.

We advise our customers to plan shipments minimum eight weeks in advance. Capacity ex Asia runs at fullest utilization, in addition the extra loader programs continue. Golden Week did not cause a slowdown, market is expected to produce full ships until Chinese New Year in January 2021. Additional pressure is created through congestion in various locations in the World (e.g. SYD / Australia, but also FLX / UK, South Africa, India, Westcoast Canada). We expect rate levels to remain high which will impact the upcoming tenders. Given this positive momentum, industry analysts have revised their earlier more negative anticipation of the ocean freight to a more moderate negative 6% volume growth for 2020, with an outlook of a growth in 2021.

This makes it very important to plan volume forecast and be open to re-routing of cargo (for congested destinations)

The situation for Europe to the Far East relaxes, also the Transatlantic ex Europe is improving and shows currently utilizations around 100%; carriers continue with blank sailings trying to keep the rate levels stable.

Only exports ex Europe to South America remain depressed.

With all stakeholders in the supply chain, the unpredictability and constant changes of the last weeks have underlined the need to stay flexible and to be able to adapt at any time. It is not a surprise that carriers announce that their booking acceptance will not go beyond six weeks due to possible future changes.

Please expect the situation on all trades subject to continuous changes.

With massive vessel withdrawals, an uncertain outlook on vessel utilizations and partly huge impacts on port terminals, we need to prepare for changing schedules and transit times (due to slow steaming, port omissions or additional port inclusions as a result of service mergers), sudden / unexpected delays in uplift, increased bottlenecks of equipment availability, less frequent departures and sudden surcharges possibly resulting in higher costs for the supply chain.

Our experts in Ocean will support and guide for

➢ DB SchenkerOcean priority product on all main trades which guarantees loading within a fixed window.
➢ Various DB SchenkerOcean delay in transit options (a. stopping of cargo in a t / s port, b. using own or contracted warehouses and store goods accordingly), this reduces actual cost in the ports (costly storage) and helps ports to prevent from being congested and thus ensures moves at quay without waiting time for truckers.
➢ DB SchenkerOcean offer for “slow boat – fast boat” possibilities if delay in transit is not an option (e.g. with sailings around Cape of Good Hope).
➢ DB SchenkerOcean offers for alternate routing possibilities to ensure cargo is lifted from port of loading.
➢ Volume forecast and allocation planning: We have access to volumes on all alliances and support volumes planning through consultation services (allocation match based on customer forecast). Under progress: volume prediction per vertical.

Contact your DB Schenker Account Manager regarding Personal Protective Equipment services ex China Europe.

  • Europe 

(Oct 27, 2020) - On trades to the West, the utilization to North America has improved to over 90%, however LATAM destinations are in decline. It is expected that carriers will take additional actions on curtailing the capacity.

On exports ex Europe to the East, carriers still report strong booking situations with only limited shortfalls. Especially commodity volumes are still going strong (logs, chemicals). Equipment availability becomes a larger concern due to an upcoming 25 - 40% reduction of inbound flows plus expected longer usage of the equipment.

All European Ocean Freight Branches are fully functioning operationally.

  • Asia Pacific 

(Oct 27, 2020) - There are no significant updates operationally, status remains unchanged.

Logistics and Transport remain classified as essential services and hence are NOT affected particularly.

Though resurging COVID-19 infections are evident in some countries across APAC, our Ocean operations remain stable and available to support customer needs. Delays are expected in customs clearance and transportation as lockdowns in some countries affect availability of workforce, including ports, airports, etc.

➢ Alternatives to move / transport cargo via other gateways / routes are established. Customers may contact the respective DB Schenker representatives for support or solutions should it be required.

  • Middle East/Africa 

(Oct 27, 2020) - An equipment shortage has been seen in Oman and Saudi Arabia, however, overall Q4 looks positive.

➢ Please get in touch with your DB Schenker Account Manager for the latest rates.

  • Americas 

(Oct 27, 2020) - On the exports ex NORAM it is worthwhile to mention that especially to Asia, the vessel utilization remains strong with no inflation of market rates expected. Void sailings and service suspensions causing severe shortage of space on all North American gateways resulting in high vessel utilization factors across the board. Roll-overs and yield management are being applied by carriers. Extra loaders deployed and services being reinstated on ad-hoc basis. Asia to North America is peaking further and bookings Asia to South America have come up massively during the past two weeks. We continue to monitor the situation.

  • Global

(Oct 27, 2020) - Europe Land is fully operational and available for business, managing existing constraints. Asia gives a heterogeneous picture with most countries fully operational and available for business while a few countries (such as India) are facing challenges, however operating. Asia Land bridge (China – South East Asia) as well as Eurasia Land bridge (China – Europe Train) are fully operating. Land operations in the Americas are also showing constraints, but still working close to normal.

  • Europe 

(Oct 27, 2020) - Restrictions directly or indirectly affecting the transportation of goods are still largely lifted in the European countries. For any potential cases of disruptive conditions, we follow our pre-defined contingency plans to ensure flows of cargo as much as possible.

With increasing economic activity in many European countries, we are adapting our transport service offerings daily to the needs of our customers. Are you restarting or expanding your international business activities? DB Schenker Land is your partner with one of the strongest and most resilient networks across 38 countries in Europe. Moreover, with our digital channels like connect4Land we offer a 24/7 entry point to our transport services, easy to use from everywhere, every time – Click. Ship. Done.

Some receivers continue to have limited operations and we ask all shippers to check the delivery possibility with the consignee to avoid cost for storage or return shipments.

  • Asia Pacific 

(Oct 27, 2020) - There is no change in operational status nor updates since the previous advisory.

Asia continues to remain at different levels regarding the COVID-19 crisis but is being heavily supported by our domestic road freight, Asia Road International (Asia Land bridge), and Asia – Europe train transport (Eurasia Land bridge). Some congestion remains as previously highlighted; however, alternate channels are being utilized to meet critical lead-times and to keep cargo traffic flowing. Most other borders within Asia are back to normal but being monitored closely. At this juncture, there are no material delays apart from the China / Vietnam border.

National borders within Australia are still “freight friendly” with closures only affecting people movements.

➢ Eurasia Land bridge

Eurasia Land bridge has doubled the volume capacity since March 2020 owing to the reliable lead time during COVID-19.

Rail services include LCL, FCL, single container, company train, and block train services on a weekly basis, both eastbound and westbound. Strong road networks and services at origin and destination ends enable seamless end-to-end services.

Lead time terminal to terminal is 16 - 18 days westbound, 18 - 20 days eastbound. Also, we launched a weekly block train Xian to Rostock with a lead time of 12 days.

➢ Asia Land bridge

Our Asia Land bridge has also doubled volume capacity since March 2020 with a compelling lead time and low freight cost.

Asia Land bridge also supports Air and Ocean connections by delivering the cargo to the nearest gateway with capacity, providing in-transit change of mode services when destination airspace is restricted or air capacity limited.

Both FTL and LTL services are available within the Asia continent, with daily departures for FTL complimented with our LTL service which has three departures southbound and twice weekly northbound.

➢ Domestic Land

Operating in 17 countries across Asia, our offered volumes and operations are back to normal. We are constantly tailoring our services to enable customers to meet the changing demand from the current erratic activity spike; recently we have developed a contactless POD signing process to facilitate a safe cargo handover.

  • Middle East/Africa 

(Oct 27, 2020) - International GCC land border connecting Saudi Arabia to other countries has been opened for land transportation / land freight movement with limited operations.

  • Americas

(Oct 27, 2020)  -

➢ USA: USA still experiencing tight capacity on west coast, south Texas and in Midwest. Anticipate capacity to be tight throughout the remainder of the year, as we continue into the peak season. Port volumes in Newark and Long Beach continue to keep drayage capacity very tight.
➢ Brazil: Market is running in normal conditions.
➢ Mexico: 100% fully operational.
➢ Canada: No issues on capacity.

  • Global

(Oct 27, 2020) - Our operations and customer services remain stable. No change in prioritizing protection of our staff and keeping our customers’ businesses running. With dedicated guidelines and preventive measures, we keep up our constant and short-term customer support:

➢ In case you need temporary space, reach out to your DB Schenker Account-Manager or local contact person!

  • Europe 

(Oct 27, 2020) - All sites in our operations in Europe currently remain fully operational with precautionary measures in place for the health of workers.

  • Asia Pacific 

(Oct 27, 2020) - There is no significant change in status for APAC countries generally from previous updates. Tight controls remain in several APAC countries due to resurgence of infection rates. We remain vigilant in monitoring the situation, to mitigate events with potential impact to operations.

Logistics and Transport remain classified as essential services and hence are NOT affected particularly.

Due to reinstatement of movement restrictions, some delays may be expected with potential temporary closures possibly impacting some operations for non- essential sectors, albeit with no significant impact to our operational status.

For India, there have been no significant operational updates. Please refer to our India website for detailed information via download.

For Greater China, no change in operational status.

Malaysia’s RMCO restrictions are extended until Dec 31.

While governmental imposed restrictions in APAC countries continue at varying levels, our service levels so far are maintained with our CL operations available to support customer needs.

Delays may be expected due to availability of workforce and enhanced strictly enforced hygiene and monitoring SOPs. Customers may contact the respective DB Schenker representatives for further support if necessary.

  • Middle East/Africa 

(Oct 27, 2020) - All DB Schenker contract logistics facilities in MEA continue to operate with appropriate health and safety standards even as Kenya and South Africa slip into partial curfew.

  • Americas 

(Oct 27, 2020) - All operations in Americas remain operational with precautionary measures in place for the health of our people and hence keeping up our customer services.

  • Global Projects & Industry Solutions

Our dedicated Global Projects & Industry Solutions teams around the world are fully operational and support clients to develop tailored transport solutions for all break bulk or out-of-gauge shipments or any other project shipment independent of markets or trade lanes.

  • Fairs, Events and Special Logistics

Our teams are in close contact with the leading exhibition organizers and associations worldwide and continue to monitor all developments closely. As the situation varies in all countries, our Global Fairs & Events colleagues are up-to-date and available to answer all your questions and assist you in all situations with tailormade solutions.

Reach out and contact our Global Fairs & Events Service Center at customerservices.fairs@dbschenker.com

DB Schenker Organizational Update

DB Schenker is closely monitoring the COVID-19 situation. With precautionary measures in place, we are aiming to maintain full operability across all DB Schenker operations. In our offices across all continents, we have taken action to enable as many employees as possible to work from home to support the social distancing guidelines put in place by public authorities.

The next customer advisory will be the November 10 release or earlier should there be significant developments. Visit our website in advance to be among the first informed.


Thank you for your patience and support.
DB Schenker COVID-19 Customer Advisory Team


We have used our utmost care in providing the information above. While the information above has been provided to the best of our knowledge and ability, the DB Schenker Group does not assume any liabilities arising from this information of the use thereof.