China’s air cargo supply chain faces more pressure

Freight forwarders are reporting a mixed picture of the current supply chain situation in China as Covid lockdowns continue following recent protests against the government’s pandemic policy.

China’s pandemic measures are continuing to have a negative impact, although market rates remain similar to the previous week, according to Flexport.

“The Covid outbreak in the Guangzhou area continues to affect manufacturing operations, resulting in cargo output delays,” said Flexport in its airfreight market update on November 29.

Additionally, low demand out of North China is set to continue and this has had a direct impact on flights.

“Due to low demand in the market commercial flights have been cancelled to reduce the supply imbalance. Rate levels have also dropped from the previous week, however, the low demand trend is expected to continue.”

Westbound Logistics pointed out in a recent customer update that Chinese New Year is also approaching with a two-week shutdown starting January 22.

The shutdown could further exacerbate supply chain weakness.

“China still hasn’t got a grip on its Covid outbreaks, with various degrees of restrictions being applied on a sporadic basis that have an impact on factories, ports, airports and transport on a regional level,” said Westbound.

However, Norman Global Logistics said on November 29 that it has seen “no evidence” of a threat to supply chain operations resulting from anti-lockdown protests across multiple cities in China.

Looking at Shanghai, Shenzhen, Guangzhou, Qingdao, Xiamen and Ningbo, it said factory operations are largely normal with volumes “at the lower end” and transport to and from airports appearing normal.

The lessening of global demand has certainly helped matters.

Freightos said on December 1: “Chinese protests against covid restrictions are intensifying. Easing restrictions could ultimately result in more lockdowns, though with demand easing these disruptions would not be expected to have the same impact on logistics as they did earlier in the pandemic.”

In a November 28 update on airfreight in East China, Dimerco added: “The market in November continues to show the shrinking of export orders due to the decline in the general economic environment and overseas demand.”

China’s air cargo industry has recovered to close to the volume it was at in 2019, the Civil Aviation Administration of China (CAAC) said recently.

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