Another Covid-related supply chain bottleneck is causing delays for air cargo carriers.
Cargo operations at a terminal of Shanghai Pudong International Airport (PVG), the world’s third busiest airport by cargo traffic, remained suspended for a fifth consecutive day following a new coronavirus outbreak in the workforce. According to a new report by Everstream Analytics, the outbreak took place at ground handling agent Shanghai International Airport Services (SIAS), which handles operations for major cargo carriers such as Air China, Qatar Airways and Cathay Pacific.
Everstream and media outlets including the South China Morning Post and Reuters said significant delays and backlogs are expected over the coming days as airport authorities implemented sanitation protocols for hundreds of employees.
“While delays have been reported at several airports across China, particularly in Beijing, Shanghai and Guangzhou, as new quarantine rules have come into effect under China’s zero-tolerance policy towards COVID-19 outbreaks in recent weeks, the new outbreak at PVG will likely add to the backlog of air cargo shipments that has started to build up since July 2021,” Everstream said in a special report. “Limited air cargo capacity out of China will likely further increase spot rates that have already climbed by more than 6 percent month-over-month.”
Officials in Shanghai have tested over 80,000 people in response to the new infections and quarantined several hundred people believed to be close contacts of the infected airport workers at SIAS, according to reports.
The suspension of operations at SAIS has resulted in some flights leaving PVG without cargo or being severely delayed due to limited manpower, Everstream noted. Cargo handling times have reportedly been two to three times longer than average, also partly due to high turnover among staff due to the stricter quarantine rules.
The affected airlines will temporarily stop operating cargo-only passenger flights and freighters to PVG until further notice, Evertream said. Qatar Airways, Air Bridge Cargo and Polar Air Cargo have diverted future shipments to either Guangzhou International Airport, Zhengzhou International Airport and Shenzhen Bao’an International Airport, while China Eastern Airlines and China Southern Airlines have announced cancellations on many of their U.S.-bound flights from PVG, Everstream said.
“Similarly, Etihad Airlines, Lufthansa Cargo, and American Airlines have all cancelled flights departing from the airport in recent days,” Everstream’s report said. “Disruptions to cargo operations are expected to continue in the coming weeks as it remains unknown when flight schedules will normalize at PVG…Customers are advised to use airlines still operating out of PVG, such as Cargolux, Nippon Cargo, ANA, Kalitta Air and SF Express, which are relying on unaffected ground handlers. Using trucking services to alternative gateways such as Hong Kong for onward flights into North America or Europe should also be considered.”
Everstream added that freight forwarders have also turned to different forms of transportation such as shipping to Singapore by ocean and then flying from Singapore Changi Airport to final destinations, all of which are likely to increase to transit times.
Authorities previously curtailed flights out of Nanjing Lukou International Airport (NKG) and Yangzhou Taizhou International Airport (YTY) to combat the spread of the Delta variant. In June, Chinese authorities restricted operations at the Port of Yantian in an effort to slow a Covid-19 outbreak in the region, creating a massive cargo bottleneck at the port and driving container prices from $5,515 in June to $15,336 this month, Seatrade Maritime News reported, citing Container xChange data. Average prices for locked-down Ho Chi Minh, meanwhile, reached $4,875 this month, up from $2,872 in May, it added.
Plus, major U.S. ocean terminals such as the twin ports of Long Beach and Los Angeles have been fighting congestion for months as retailers restocked inventories from Asian suppliers amid high consumer demand.
Additional reporting by Jessica Binns.