Air cargo faces China supply chain disruption

New Covid quarantine rules for cargo workers at key gateways in China are putting air cargo supply chains under pressure.

Over the last few weeks, Covid cases in China have begun to pick up as the country contends with the contagious Delta variant of the virus.

To contain outbreaks, lockdowns and stricter quarantine measures have been put in place which is having an impact on cargo operations at both airports and seaports.

According to supply chain risk analyst, Everstream Analytics, pickup and delivery services, as well as air cargo operations have seen the most disruptions, with 15 airports identified as having been affected.

The analytics firm said that Nanjing Lukou International Airport and Yangzhou Taizhou International Airport had both been temporarily closed earlier in August.

Meanwhile, earlier this month Beijing airport had been operating at around 43% capacity, Shanghai Pudong at around 33% capacity and and Xiamen Airport (XIN) at 66%.

Each airport has cancelled hundreds of flights.

“Furthermore, due to several crew members testing positive for Covid-19 and thereby impacting labor availability, China Cargo Airlines and China Eastern Airlines have suspended passenger belly freighters until the end of August,” a report from Everstream Analytics said.

“The situation is likely to cause airport congestion and delays and trigger further rate increases due to lost air cargo capacity. Major airports in China have restricted operations to undertake virus disinfection work and as a result, shortages in flight capacity and staff have been reported.”

Freight forwarder Flexport said that the most affected airport is Shanghai Pudong where ground handling staff are working for seven days, quarantining at a hotel for seven days and then quarantining at home for seven days.

“This has effectively reduced the workforce at the airport by almost 50% which has forced many airlines to cancel flights and also limit the amount of work for the ground handling staff,” Flexport said.

“As a result of these changes, Flexport has embargoed the carrying of import freight into PVG so the loading of export cargo from PVG to LAX can be prioritised.

“These new work rules are expected to be around for several weeks if not longer so this is also going to have a significant impact on how much freight can move through PVG during the peak season.”

Scan Global Logistics said: “Over the past days we have again seen flights being cancelled from Asia due to local Covid-19 outbreaks forcing airlines and ground handlers into operating under restrictions.

“Several freighter-rotations have been cancelled and passenger flights have been withdrawn as flight crews could not stay overnight due to quarantine regulations.

“This has had an immediate impact on capacity and has been driving up rate levels. Some specific areas in Asia are more impacted than others, however, the overall market situation remains difficult.

“Volume has reached pre-Covid-19 levels, but the industry is still facing a significantly reduced capacity situation with many passenger flights not having resumed as off yet, driving a further supply and demand imbalance.”

It is not just airfreight that is being affected by the latest outbreaks. Earlier this month a terminal at Ningbo was forced to close due to an outbreak, while Yantian faced a similar situation in June.

Manufacturing and production operations are also reported to have been affected.