DB Schenker Air Freight Intermodal Solutions Airplane Inside Loading

Customer Advisory COVID-19 Global Update

February 2, 2021

Please find enclosed the newest edition of our COVID-19 global customer advisory update. The impact of the COVID-19 pandemic continues to disrupt all industries and geographies. We will keep updating you on a bi-weekly level and we hope that this continuous reporting will give a little guidance and orientation in these difficult times.

For the time being the conditions under which we all operate will continue to be disruptive and far from normal. We look forward to continue our update services as long as the global pandemic influences the economy, hence our common business.

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.

Executive Summary

Ocean Freight

  • Market outlook for 2021 shows a growth in all trades between 3 to 5%.
  • Capacity withdrawals after Chinese New Year to correct schedules and ease congestion at destination.
  • Volume flows ex APAC to all destinations remain very strong, to last up to March / April at least, volumes ex EU picking up as well.
  • Equipment availability situation in APAC improving, however now showing more severe deficit in Europe.
  • Rates for all trades ex APAC remain at high levels, rates on backhaul trades (EU to Far East, North America to Far East) on the rise.
  • Global carrier schedule reliability down to just 44%.
  • Congestions in several places in the world on the rise.
  • DB Schenker offers conversion of FCL into breakbulk as well as into LCL to overcome shipping bottlenecks ex APAC.

Air Freight

  • The airfreight market remains under pressure with increasing impacts of the pandemic (e.g. border closings and restrictions) now being caused by an increase in COVID-19 cases.
  • Due to low demand in the international long-haul passenger market, capacity supply remains critical. Especially the continuous uncertainty leads to a situation where no major changes are expected across the passenger wide-body capacity and major airlines keep the majority of their fleet grounded due to the pandemic.
  • Freighter capacity is expected to be the major enabler for global airfreight supply chains securing continuous access on major trades and routes in addition to some niche passenger freighter operations in particular to support the vaccine distribution across the globe.
  • Charter demand recently increased as well as airfreight demand for larger shipments which are considered as part of a mode shift from ocean to air as the ocean freight supply chain face issues due to equipment shortage and port congestions. In the short-term this will likely lead to an additional demand in the already congested airfreight market adding additional pressure on the demand-supply imbalance in the market.

Land Transport

  • Restrictions to contain the COVID-19 pandemic are re-established in several European countries, directly or indirectly affecting transportation.
  • In case of disruptions, we follow our pre-defined contingency plans to ensure flows of cargo. We are adapting our transport service offerings daily to the needs of our customers.
  • Some receivers continue to have limited operations. All shippers may check the delivery possibility with the consignee to avoid cost for storage or return shipments.

Contract Logistics

  • Our operations and respective customer services remain stable globally.
  • We continue prioritizing protection of our staff and keeping our customers’ businesses running.
  • BCP‘s and preventive measures are in place and monitored around the world.
  • To support our customers on short call, we continue offering short-term warehousing and all conceivable value-added services.
  • By handling medical devices and PPE worldwide (as part of our integrated end-to-end healthcare services) we provide support for distribution and administration of COVID-19 vaccination, foster medical centers and respective treatments.

Global Market Updates

Demand for vaccines is strongly increasing week by week as emergency approvals have recently been granted by national regulatory authorities for various COVID-19 vaccines and as further approvals are currently being evaluated and processed. The global demand and capacity requested is yet limited to certain trade lanes but expected to increase shortly throughout the first half of 2021. Especially during the second half of 2021, a strong increase in production and consequently global demand for the vaccine distribution by airfreight is necessary. This increase will lead to a situation in which all supply chain partners are required to collaborate closely to mitigate potential negative impacts or disruptions during transportation and distribution.

The airfreight market has been used to transport vaccines between +2 to +8°C, however has not yet been exposed to a situation where a demand for a global distribution of a vaccine requires the product to be kept deep frozen. Operationally, the major impact as already experienced in the initial weeks is expected in the final mile distribution due to the temperature requirements of a COVID-19 vaccine. Some of the distribution is expected to be resolved through a domestic or road freight distribution network as key pharmaceutical companies are using multiple production sites mainly in the USA, Europe and Asia.

For successful distribution, storage, repacking, and administration of a COVID-19 vaccine, additional medical supplies are needed – including needles, syringes, alcohol prep pads, surgical masks and face shields, gloves, mixing kits and additional PPE. Being part of our integrated end-to-end healthcare services DB SCHENKERlife+ with licensed and regulated facilities, alongside dedicated and qualified staff, we offer all conceivable warehousing services to handle medical devices and PPE, while supporting respectively institutions and industries globally.

  • Global

(Feb 2, 2021) – As the pandemic impact is increasing, the impact on the airfreight market is also adding pressure in certain spots of the world. Especially operationally, the flexibility to adapt quickly has been most critical recently again as border closings and governmental restrictions are impacting the global airfreight supply chains. In particular, in the last two weeks border closings (e.g. Portugal) have required short-term adjustments. Therefore, it remains critical to continue the constant exchange and being able to share volumes forecasts which allows to set up the most resilient and required solutions for our customers. DB Schenker's own controlled network has proven to be a very resilient capacity supply and will support us also in the coming weeks and months as additional demand is added into the market. Especially the severe situation in the ocean freight supply chains is already impacting the market due to recent mode shifts of shipments across various industries and supply chains. The impact is forecasted to remain also applicable after Chinese New Year. However, the mode shifts are not only impacting scheduled airfreight capacity, but in particular adding additional demand in the charter business with increasing demand for charter flights across various industries and sectors (e.g. Automotive, Consumer & Retail, High-Tech and Healthcare). This is triggered through an increasing risk many customers forecast related to their supply chains and possible product shortage in the consumer markets. With the overall demand continuing to remain on a high level, large changes in the airfreight capacity are not expected due to low passenger demand and travel forecasts. Especially with increasing COVID-19 cases airlines are also facing additional restrictions due to governmental regulations (e.g. flight ban of all Emirates and Etihad flights to the UK) to limit and mitigate the spread of COVID-19. Therefore, we already foresee that the access to freighter capacity will remain most critical in 2021.

Our DB Schenker own controlled network includes flights on following routes:

→ Chicago (RFD) – Munich (MUC) – Tokyo (NRT) – Seoul (ICN) – Munich (MUC) – Chicago (RFD)
→ Shanghai (PVG) – Chicago (RFD)
→ Chicago (RFD) – Shanghai (PVG)
→ Frankfurt (FRA) – Shanghai (PVG) – Frankfurt (FRA)
→ Luxembourg (LUX) – Shanghai (PVG) – Luxembourg (LUX)
→ Frankfurt (FRA) – Beijing (PEK) – Frankfurt (FRA)
→ Frankfurt (FRA) – Zhengzhou (CGO) – Amsterdam (AMS)
→ Leipzig (LEJ) – Zhengzhou (CGO) – Frankfurt (FRA)
→ Hongkong (HKG) – Frankfurt (FRA)
→ Frankfurt (FRA) – Mumbai (BOM) – Frankfurt (FRA) – Atlanta (ATL) – Frankfurt (FRA)
→ Frankfurt (FRA) – Chicago (RFD) – Frankfurt (FRA)
→ Luxembourg (LUX) – Indianapolis (IND) – Luxembourg (LUX)

More detailed information on this new flight schedule can be found by clicking here.

  • Europe 

(Feb 2, 2021) - 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.

→ Please get in touch with your DB Schenker Account Manager for more information.

  • Asia Pacific 

(Feb 2, 2021) - There are no updates on any impacted operations due to COVID-19, with status largely remaining unchanged.

Continuing infection rates in the region underscore the prevalent risk on operations and the vigilance necessary to cope with the ever-present COVID-19 situation.

Control measures remain in effect and even extended in some countries across APAC. Our air freight operations remain available to support customer needs. Delays will be expected in customs clearance and transportation as pressure on labor / driver availability due to movement restrictions may have an impact. Alternatives to move / transport cargo via other gateways / routes are being established and stop-gap measures for labor / driver shortages are being deployed where necessary. Customers may contact the respective DB Schenker representatives for support or solutions if required.

Capacity is expected to remain volatile. We remain vigilant in monitoring the situation to mitigate events with potential impact to operations.

Note: Myanmar Airport Operations are in lockdown primarily due to State of Emergency declared over military coup.

  • Middle East/Africa 

(Feb 2, 2021) - Overall, the air freight operations in the countries remain uninterrupted and we continue to serve our customers. Only international passenger flights have been suspended in Saudi Arabia and Oman until further notice.

Situation

Country

No operational restrictions for air cargo business         

Angola, Bahrain, Egypt, Kenya, Namibia, Mozambique, Oman, Qatar, South Africa, Saudi Arabia, UAE

→ Please get in touch with your DB Schenker Account Manager for more information.

  • Americas 

(Feb 2, 2021) - Continued strain on capacity to varying degrees by trade-lane as we progress into the 1st quarter: Outlined below. In addition, import terminals are at times running behind in transitioning cargo creating challenges. Especially the ground handling situation at key major airports such as Chicago O’Hare, New York and Los Angeles has led to heavy delays (2 - 4 days recovery) in the import ground handling process and workforce constraints due to COVID-19 impacts.

DB Schenker closely monitors airport operations to mitigate any impacts to our customers and insure they are kept informed. DB Schenker own controlled flight network both transatlantic and transpacific are providing secure capacity for our customers, and our airport-based offices are providing the necessary coordination to provide the fastest release of cargo possible. As part of that network we have fully integrated our Rockford (RFD) gateway to support the mid-west / Chicago area.

Situation by trade lane is as follows:

USA – Europe

→ Market demand is moderate to strong. DB Schenker maintaining five 747 freighter flights per week as part of its Global Flight Operations Program to provide additional air cargo capacity to Europe. These flights are operating from Atlanta and Chicago-Rockford to Frankfurt and Munich, as well as from Indianapolis to Luxembourg.

They offer DB Schenker customers a stable & secure access to capacity in what continues to be a volatile market situation.

USA – Asia (excluding China)

→ Capacity remains tight but manageable on most trade lanes with the strongest capacity challenges remaining with movements to Australia, Singapore and India. DB Schenker has in place large blocked space agreements on multiple flights per week from ORD to Australia. To India as part of its own controlled flight network there are connections via our European operations to BOM and MAA. As well two times a week we have flight operations ORD / RFD to Korea (ICN), that continues on to China (PVG).

USA (exports to) – China

→ No capacity constraints for the most part to destinations in China. Exception being PVG, where capacity is tight. DB Schenker introduction of the own controlled flight network from ORD / RFD to PVG providing a secure option to that market and surrounding cities.

USA – Latin Am / Latin Am to Europe and APAC

→ Intra-Americas: Market demand has grown significantly with access to capacity becoming tight as freighter carriers are reducing scheduled flights, and passenger flights continue to be well below pre-COVID-19 levels. This situation is affecting all countries in central and South America with cargo movements intra-Latin America as well as into the USA and Europe and beyond.

USA / Latin Am to Middle East / Africa

→ South Africa with continued strong demand and shortage of capacity.

  • Global

(Feb 2, 2021) – The global supply and demand graph for 2021 shows an imbalance in favor of the demand of about 3 - 3.5%. This means that rate levels will not reduce significantly over the next months, but remain stable or will move up. All trades ex APAC remain strong with liftings, this is expected to continue without a major CNY impact due to roll pools built up by the carriers. The equipment situation shows slight improvement while rates are stable. GRI announcements for Feb 15 and Mar 1 ex APAC are not expected to materialize. A different scenario is existing for exports in the other Regions, especially ex Europe: the container deficit has reached critical levels, in consequence, carriers announce booking stops / cancelation of spot bookings even for base ports. The “battle” for equipment is pushing up the rates, through GRI’s and or introduced or increased Equipment Imbalance Surcharges. We strongly recommend most accurate forecasts for allocation planning. Different to the last update, carriers have now started to announce blank sailings on the main trades ex APAC to take corrective actions on the schedule reliability and to ease the congestion at prominent destination ports. A proper revamp of schedules however will not take place before q / 2021.

Career Capacity Development 1-12/2020

Career Capacity Development 1-12/2020

Import free time in all markets is generally cut down to zero with effect of January 2021. The current circumstances make it very important for our customers to plan volume forecast (we advise 4 to 8 weeks in advance) and be flexible to re-route cargo (for congested destinations). Please expect the situation on all trades subject to continuous changes.

With 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, inconsistent 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.
→ 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.
→ Cargo storage options or cargo in transit options to avoid costly tariffs.

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

Alternate FCL shipping options via breakbulk (on multipurpose vessels) or via LCL.

  • Europe 

(Feb 2, 2021) - All European Ocean Freight Branches are fully functioning operationally.

  • Asia Pacific 

(Feb 2, 2021) - Notwithstanding the market situation as highlighted by Global Ocean, there are no significant COVID-19 impacted operations, as status remains unchanged.

Though COVID-19 infection rates remain prevalent in countries across APAC, our Ocean operations continue to be available to support customer needs. Delays could be expected in customs clearance and transportation, as pressure on labor / driver availability due to movement restrictions may have an impact. Stop-gap measures for labor / driver shortages will be deployed where necessary.

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

Note: Myanmar Port Operations were affected on Feb 1 primarily due to State of Emergency declared over military coup. Ocean Import and Export operations have started running again on Feb 2, though delays will be expected, and schedules will be subject to change as the situation develops.

  • Middle East/Africa 

(Feb 2, 2021) - DB Schenker is fully operational and available to manage the current demand from customers even though an equipment shortage has been seen in the region.

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

  • Americas 

(Feb 2, 2021) - 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

(Feb 2, 2021) - Europe Land is fully operational and available for business, managing existing COVID-19 constraints re-established in many European countries. 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 Landbridge (China – South East Asia) as well as Eurasia Landbridge (China – Europe Train) are fully operating, although facing congestions. Land operations in the Americas are also showing constraints, but still working close to normal.

  • Europe 

(Feb 2, 2021) - General restrictions to contain the COVID-19 pandemic are continuing to be in place in several European countries and are in parts directly or indirectly affecting the transportation of goods. For any potential cases of disruptive conditions, we follow our pre- defined contingency plans to ensure flows of cargo as much as possible. In addition, we are adapting our transport service offerings daily to the needs of our customers.

Europe Land Transport Heatmap Graphic

Are you up-scaling or down-scaling your business activity in response to the changing market environment? DB Schenker Landtransport is your partner with one of the strongest and most resilient networks across 40 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.

  • Asia Pacific 

(Feb 2, 2021) - Our Domestic Land product continues unabated to provide our regular high level of service.

Our Asia Landbridge FTL / LTL road service is running to schedule except in relation to pickups / deliveries in Northern China. The recent outbreak in Hebei province has resulted in a 70% driver shortage that is estimated to remain for another 2 weeks. This is adding up to 3 days to lead-times. Pending Chinese New Year holidays are also starting to impact activities within China and will continue until end of February.

Border congestion due to high demand can add between 1 and 3 days to Asia Landbridge. A global demand for containers due to Ocean and Air capacity constraints has put significant pressure on road assets across the region. DB Schenker staff at Asia Landbridge border offices ensure lead-times are minimized and service levels maintained through “triage” prioritization. Additional labor and associated domicile costs are still required to strategically avoid lengthy quarantine periods for our international drivers.

Our Domestic and International road services continue to meet the high demand and are strategically positioned to meet the forecast demand spike associated with ongoing reduced ocean freight and airfreight capacity. However, Customers are strongly urged to coordinate any volume spikes with their DB Schenker Account Manager as early as possible.

Congestion levels continue to fluctuate on our Eurasia service for Rail and Road. There are delays > 10 days at CN / KZ and CN / MN; 3 - 7 days at CN / RU border and < 2 days at BY / PL (Mala) – refer table 1.

Low < 3 days, Medium > 3 days, High > 7 days, Extreme > 10 days

Table showing the Westbound ETD delay and border congestion delay risks

Westbound container stocks remain low and are contributing to delays.

We therefore recommend checking estimated lead-times with your DB Schenker Account Manager.

Note: Myanmar Transport Operations were affected on Feb 1 due to State of Emergency declared over military coup. As of Feb 2, deliveries in Mandalay and Yangon are fully operational.

  • Middle East/Africa 

(Feb 2, 2021) - Land transportation may be delayed in some countries due to additional checking. In some parts of the GCC, cargo movement has been restricted to food and essential items.

→ Please get in touch with your DB Schenker Account Manager for more details.

  • Americas

(Feb 2, 2021) -

→ USA: Fully operational. Trucking industry as a whole has a staffing constraint due the COVID-19, in particular in LTL.
→  Brazil: Market is running in normal conditions. No government lockdowns as of this moment.
→  Mexico: 100% fully operational. Still lockdown in most of the Mexican States.
→  Canada: Fully operational. Quebec is in lockdown with a curfew, and Ontario is on lockdown.

  • Global

(Feb 2, 2021) - 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, e.g. social distancing, wearing masks, temperature control, sanitizing stations and respective controlling of health and safety regulations.

While supporting companies and institutions around the globe with handling of PPE and medical devices for successful distribution and administration of a COVID-19 vaccines, we keep up our offering towards our customers:

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

  • Europe 

(Feb 2, 2021) - All sites in our operations in Europe currently remain fully operational with precautionary measures in place for the health of workers.

  • Asia Pacific 

(Feb 2, 2021) - There is no significant change in status for APAC countries generally from previous updates. Tight controls remain in APAC countries, with some extending movement restriction measures due to continuing infection rates. Delays may be expected. We remain vigilant in monitoring the situation, to mitigate events with potential impact to operations.

→ For India, there have been no significant operational updates. Please refer to our India website for detailed information via download.
→ For Greater China, a resurgence of infections particularly in North China has been met with the implementation of strict containment measures in the Areas. Labor shortages are expected which may cause backlog and delays. Stop-gap / temporary measures are being deployed where necessary. Our local teams will be contacting customers directly to pro-actively inform on affected operations (if any).

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.

Note: Myanmar Contract Logistics Operations were slightly affected on Feb 1, with only skeletal crew on-site due to State of Emergency declared over military coup. As of Feb 2, our warehouses are fully operational.

  • Middle East/Africa 

(Feb 2, 2021) - All DB Schenker contract logistics facilities in MEA are operational as per the appropriate health and safety standards and other regulations levied by the local government.

  • Americas 

(Feb 2, 2021) - While observing increasing cases of COVID-19 infections across the region, our warehouses continue to operate, with precautionary measures in place for the health of our people and hence keeping up our customer services.

→  USA: All operations in the USA remain operational with precautionary measures in place for the health of our people and delivery of services to our clients. We are seeing increasing cases of COVID-19 in the USA and remain very robust in our safety measures and protocols.
→  Mexico: COVID-19 numbers are increasing in Mexico. Some states do require partial shutdowns of private life and economy in particular on weekends. We are doing everything possible to minimize the impact to our personnel and facilities.
→ Canada: Expanded lock down measures Province of Ontario and Quebec. All Contract Logistics sites in Canada remain operational with health and safety measures in place for the safety of our associates and continued service.

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 February 16 release or earlier should there be significant developments. Visit our website in advance to be among the first informed.

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

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.