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Coronavirus is affecting the air cargo sector

Posted on Wednesday, February 5th by

The measures taken to stop the coronavirus from spreading are going to have a big impact on the air cargo industry.
British Airways has already announced that all direct flights to and from mainland China will be suspended. Other companies, such as United Airlines, Cathay Pacific and Air Canada also decided to reduce flight numbers.

In the meantime, the Chinese government has announced the extension of the New Year holiday. At the same time, businesses in the Guangdong province, which include Shanghai, will be closed until the 10th of February. Also, the majority of flights into and out of Wuhan were stopped last week.

At the moment it's not certain how affected the air cargo industry will be, but supply chains will be hit as air cargo capacity has been already reduced. 

Westbound Shipping, a freight forwarder, has declared that its staff in China would work from home, but still, the supply chains would be affected as truckers, warehouse staff, cargo handlers, manufacturing staff would not be able to return to work for longer than initially expected.

Thomas Cullen, the leader of Transport Intelligence practice declared that the most significant direct effects will be on the air transport market and most prevalent on belly-freight services on passenger flights

He stated: “Already there are press reports of a collapse in demand for domestic [passenger] services in China. Presumably, freighter flights will be less affected. In other areas of transport, some barge and low-draft vessel traffic has been slowed into Wuhan’s river-port facilities but this does not appear to be severe yet. The indirect effects are likely to be as important economically. Already the price of oil has fallen. The impact on the exposed sectors of shipping and airfreight is obvious. The question is how long will the impact be felt and how deep will any fall in demand and prices be.”

Freight Investor Services (FIS) explained that TAC Index data shows that rates from Shanghai to Europe are increasing by 9.2% from one week to the previous week, Hong Kong to Europe increased by 1.4%, Shanghai to Amsterdam increased by 19.4% and Shanghai to London increased 4.3%.

FIS stated that if other airlines would act in the same way as British Airways, deciding to reduce belly hold capacity, demand for freighters could increase. In regards to this, FIS declared “The effect on prices is as of yet unknown, volumes are seasonally low and will be hit by factory closures and quarantine measures. Freight businesses should pay close attention to any subsequent back-log of volume that will be released into the market if and when quarantine measures have been retracted. The effects of manpower restrictions caused by quarantine measures in China are also unknown, however likely to cause further volatility.”

In the meantime, freight forwarders have warned that their offices in China will remain closed, in line with the extended New Year holiday: “Our offices will open after the extended holidays. In the meantime, essential staff will attend our Shanghai office, as needed and other team members will work remotely."

“There is no evidence that coronavirus can be transferred on cargo, which means that contamination will not spread to the UK on freight.

“We are monitoring the situation closely and will publish new information on our website and social feeds, as it becomes available.”, Norman Global Logistics declared.

According to the Civil Aviation Administration of China (CAAC), Wuhan Tianhe Airport was the country’s sixteenth most busy in terms of cargo, handling 221,576 tonnes.

The city's industrial zone is complex, automotive and pharma products are made, amongst others.

Source: Aircargo News

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