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Customer Advisory COVID-19 Global Update

January 21, 2021

Please find here the newest edition of our COVID-19 global customer advisory update. The new year started where we have left the old one. 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. Entering 2021, 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%.
  • Limited capacity withdrawals in the market after LNY.
  • 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 improved, 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 50%.
  • Congestions in several places in the world on the rise.

Air Freight

  • The airfreight market is performing stronger compared to recent expectations with a possible additional demand spill-over due to equipment shortage in Europe for Ocean freight shipments. This can quickly add additional pressure to the on-going market dynamics due to ocean to air mode shift.
  • COVID-19 has impacted the capacity supply stronger compared to the demand situation in the airfreight market as international long-haul passenger flights remain limited and grounded due to ongoing pandemic developments and governmental regulations.
  • Access to capacity will be most critical in 2021 as market is only expected to slightly improve as vaccine distribution has started. There are no major improvements and changes expected in 2021. 
  • Several industries have shared market forecasts that remain quite strong with possible further improvements compared to previous year 2020 which can quickly lead to an even more tight capacity situation during peak months e.g. Chinese New Year and Peak Season. 
  • DB Schenker has setup one of the strongest own controlled networks in the market as part of a stable capacity access for our customers in a dynamic and fast changing market environment. This network is setup around the largest economies to serve our customers on the major trades connecting key continents and countries throughout the flight network. 

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.
  • BCPs 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

(Jan 21, 2021) - The airfreight market is looking ahead at another challenging year due to the ongoing pandemic impact in the capacity supply with passenger flights being grounded and low demand in international long-haul passenger travel. Cargo has outperformed the market in 2020 and several industries shared their forecasts for 2021 predicting another busy year ahead. This will lead to a continuous demand across all regions and specially to major trades that have proven to be critical throughout the pandemic so far. Hub-to-Hub networks will allow for stable capacity access during the pandemic as the industry remains focused on major freighter capacity access to enable a stable supply chain. Rate escalations are expected during the peak months (e.g. Chinese New Year, Peak Season) as there is no sign of improvement yet to the pandemic situation. Even though the distribution of several COVID-19 vaccines started a heard immunization is not expected before 2022 / 2023 which will continue to impact international capacity supply. The most critical aspect will be to plan and consider block space agreements or capacity allocations for a stable access on major routes to avoid delays in the continuous congested airfreight market. Supply Chain Planning and stability will be the most critical aspect throughout 2021.

→ DB Schenker has setup one of the strongest own controlled networks in the market as part of a solution and stable capacity access on major routes across the largest economies and continents. The network has been further expanded now also serving major economies with direct flights or connections between North America, Europe and Asia Pacific. This network will serve our customers in 2021 to allow for a premium capacity access on DB Schenker controlled freighter flights with large main deck capacity access and allocations. The 43 flights globally each week, comparable to 135 wide-body Boeing 777 flights and capacity, will enable us to be successful in operating a high quality and controlled capacity to allow for fast and direct airfreight solutions.

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 

(Jan 21, 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 

(Jan 21, 2021) - There are no updates on any impacted operations due to COVID-19, with status largely remaining unchanged.

Recent resurgent infection waves in the region underscore the continued risk on operations and the vigilance necessary to cope with the ever-present COVID-19 situation.

Though tight controls remain in some countries across APAC (e.g.: State of Emergency reinstated in Japan and declared in Malaysia), 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.

  • Middle East/Africa 

(Jan 21, 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 

(Jan 21, 2021) - Continued strain on capacity to varying degrees by trade lane as we progress into the 1st quarter. In addition, airport terminals are at times running behind in transitioning cargo creating further challenges. Especially the ground handling situation at key major airport 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.

The situation has not improved yet, but DB Schenker continues to closely monitor the situation to mitigate any impacts for our customers and inform you immediately in case of any change. 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 well DB Schenker is growing its own flight operations for 2021, with additional export offering to Europe and now to Asia with heavy utilization of Chicago and Rockford.

Situation by trade lane is as follows:

USA – Europe

→ Market demand is moderate to strong. Further charter flights have been launched with the Global Flight Operations Program to provide additional air cargo capacity to Europe.

→ These flights are operating from Atlanta, Chicago-Rockford and Indianapolis to Frankfurt and Munich providing secure capacity solutions to Central European markets. They offer DB Schenker customers a stable 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’s strong ‘Part Charter’ capacity in place from ORD to destinations in Australia, and own controlled flight network via the DB Schenker Euro Hub from FRA – BOM are supporting DB Schenker customer demands to these destinations.

USA (exports to) – China

→ No capacity constraints for the most part to destinations in China. However, demand remains tight to PVG. Schenker introduction of the own controlled flight network from ORD – RFD to ICN and 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 in the 4th quarter and is continuing into 2021, 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

(Jan 21, 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. All trades ex APAC see strong liftings, at the same time the equipment supply in Asia has improved slightly. Backhaul trades ex EU and ex NORAM to FE have seen a spike in rates during the past 6 to 8 weeks with rate levels potentially going up further. Rates increased by itself, but also by increased PSS and Equipment imbalance surcharges. Container deficits are visible especially in the EU and require proper forecasts. Capacity remains unchanged, that means idle capacity limited to 1.7% with very limited blank sailings after and round Chinese New Year. Congestion overall has not eased, e.g. the TP Westcoast ports are congested heavily with partially 35 - 40 vessels waiting to enter the ports or the substitutional ports (like RTM) to cover the UK ports starting to be congested as well so that additional solutions are required. Schedule reliability remains at low levels with no real option to improve on maritime services.

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.

  • Europe 

(Jan 21, 2021) - All European Ocean Freight Branches are fully functioning operationally.

  • Asia Pacific 

(Jan 21, 2021) - Notwithstanding the severe market situation on rates and capacity as highlighted by Global Ocean, there are no significant COVID-19 impacted operations, as status remains unchanged.

Though resurging COVID-19 infections are evident in some countries across APAC (e.g.: State of Emergency reinstated in Japan and declared in Malaysia), our Ocean operations remain 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.

  • Middle East/Africa 

(Jan 21, 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 

(Jan 21, 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

(Jan 21, 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 to 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 

(Jan 21, 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.

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UK COVID-19 & BREXIT Update:

The appearance of a highly contagious new virus mutation in the UK converged with the impact of post-Brexit customs and trade regulations.

Following a brief suspension of our system freight network, DB Schenker resumes collecting compliant land transport shipments from the European Union to the UK from January 21, 2021 onwards. This is made possible by working closely with our commercial and industry partners on gathering end to end contact and customs information which are essential for new Brexit customs clearance.

European companies and their UK customers can also find all the necessary information and relevant customs documents templates on our website, and in addition customers can also reach out to our sales and customer service representatives who can provide the information as well.

We continue to encourage our European Union customers to advise their Great Britain importers to fully engage in the necessary import processes to facilitate and expedite the clearance of their consignments. Even if direct services and network shipments from the UK have continued, the same level of customs compliance is required.

++++++++++++++++++

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.

Europe Land Transport Heatmap Graphic

  • Asia Pacific 

(Jan 21, 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 between 3 - 4 weeks. This is adding up to 3 days to lead-times.

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.

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.

  • Middle East/Africa 

(Jan 21, 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

(Jan 21, 2021) -

→ USA: USA still experiencing tight capacity in certain areas due to COVID-19 impacts on carrier staff. Anticipate capacity to be tight throughout the remainder of the year, as we continue into the peak season. California, Colorado, Connecticut, Illinois, Hawaii, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington all have stay at home orders.
→  Brazil: Market is running in normal conditions. No government lockdowns as of this moment.
→  Mexico: 100% fully operational. Although Mexico still has an imbalance of South / Northbound equipment.
→  Canada: Toronto and Peel regions are on lockdown effective for 28 days from start of January. Other close by regions have moved to ‘red status’ which allows everything to be open, but with very strict limitations. Restaurants and retail are shut (except for curbside service). Department, hardware, grocery stores remain open as essential.

  • Global

(Jan 21, 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, we keep up our constant and short-term customer support. 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 

(Jan 21, 2021) - All sites in our operations in Europe currently remain fully operational with precautionary measures in place for the health of workers.

  • Asia Pacific 

(Jan 21, 2021) - There is no significant change in status for APAC countries generally from previous updates. Tight controls remain in several APAC countries due to resurgent outbreaks. We remain vigilant in monitoring the situation, to mitigate events with potential impact to operations.

Due to extension of movement restrictions (e.g.: State of Emergency reinstated in Japan and declared in Malaysia), some delays may be expected.

→ 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.

  • Middle East/Africa 

(Jan 21, 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 

(Jan 21, 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 shut downs 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 affect non-essential retail in the Province of Ontario. 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 3 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

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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.