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Coronavirus (COVID-19) Impact on Your Supply Chain Operations

We continue to offer information regarding the COVID-19 virus situation. The following will address operational status and market conditions. 

Governments around the world and the US continue to place restrictions on the movement of people in order to curtail the spread of COVID-19. Vantec Hitachi Transport, will continue to operate both physically and virtually in all possible locations while maintaining employee safety and following recommended CDC guidelines.

At this time, a growing list of states have issued orders for residents to remain at home with the exception of those working in essential service categories. As a logistics provider, we meet this exception and will continue to process shipments for any customers who are operating and require our services. We have previously communicated our business continuity plan and the specific steps we are taking to maintain the safety of our employees during this difficult time. As always, we will closely monitor this fluid situation and keep you updated. 

We offer the following information updated April 1, 2020:

Operations Update:

  • Overseas Operations General Guidelines: More countries are implementing quarantine restrictions, which are  impacting logistics operations. We strongly encourage our clients to keep close communications with suppliers and our staff to ensure mutual understanding of shipment details.
  • Air Cargo Impact on Global Capacity: Our origin offices report widespread cancellation of commercial   passenger flights across multiple lanes. In general, commercial flights represent 70-80 percent of available cargo capacity. This will impact available space and result in sharp increases in rates. Be prepared for spot market rates which could change rapidly. 
  • India Operations: As of March 23, 2020 the Indian Government has imposed severe travel restrictions and is allowing only the movement of essential goods within their borders. At this time, all India ports are closed to new cargo. On April 1st, carrier ONE declared they are extending free detention for the period March 25th - April 7th. Port storage, demurrage and other charges will be billed as per their current practice Effective March 25th all domestic flight operations and intrastate travel will be suspended. In addition, all non-essential businesses are also closed.
  • UPDATE 3/26/20 CBP has revised this temporary option and has issued a statement which only allows additional days for a narrow scope of circumstances, including a physical inability to file entry or payments, due to technology outages or port closures: Customs and Border Protection: Additional Days for Payments due to COVID-19 On March 20th, CBP announced via CSMS, U.S. Customs and Border Protection (CBP) will approve on a case by case basis additional days for payment of estimated duties, taxes and fees due to the severity of the COVID-19 outbreak.  CBP has confirmed that the March 20, 2020 debit authorizations for the Periodic Monthly Statements and the daily statements have been transmitted to the Department of Treasury. CBP asks that you work directly with your financial institution if you wish to prevent these funds from being withdrawn. Requests should be directed to the Office of Trade, Trade Policy and Programs at OTentrysummary@cbp.dhs.gov or interested parties may send requests to Director Randy Mitchell at randy.mitchell@cbp.dhs.gov.
  • US / Canada border: President Trump announced the US/Canada border would be closed to nonessential travel. The movement of cargo, trade and healthcare workers will continue to be able to traverse the US/Canada border. 
  • US Mexico border: Effective Friday, March 20th at midnight, the US/Mexico border closed to nonessential travel. As with the Canadian border, President Trump has said "These new rules and procedures will not impede lawful trade and commerce.". 
  • JFK Cargo Operations: Our New York operations report JFK air cargo terminals are experiencing delays due to staff shortages attributed to COVID-19. We have received reports that truckers are experiencing longer wait times to pick up or drop off cargo which could result in demurrage or other fees.
  • China Operations: Cargo volumes are moving toward pre-outbreak levels at Chinese ports as production and service levels begin to normalize. Cargo backlogs in China are beginning to clear, however air freight remains tight due to passenger flight cancellations.  
  • Ocean Carriers: report a return to normal operations in all areas within China with the exception of Wuhan, where staff continue to work remotely or in split schedules.
  • US/EU Travel Ban: President Trump has issued a proclamation declaring 30-day travel ban between Europe and the U.S. effective March 13, 2020. The White House has also stated the travel ban does not apply to logistics activity involving the movement of goods.
    • All passenger flights have been cancelled and air cargo is only available via air freighter. This will significantly restrict available air cargo capacity between the US and Europe.
    • Rates are currently double or triple normal levels. Due to fluctuations, shipments are quoted with spot rates.
    • Departures from EU origin airports are currently between 1-2 weeks from time of booking.  
  • Italy Operations: The Italian Ministry of Transport confirmed in an annex note on Sunday 8th  that the limitation of free movement would not apply to any logistics activity or good transportation action as these activities are considered necessary.
    • Rates are similar to US/Europe and the situation is described as very fluid. Allow longer lead times and expect spot rates for shipments.
  • Carrier Blank Sailings: In spite of the trend toward normal operations in China, carriers continue to announce blank sailings. This is in response to an expected decrease in demand as the COVID-19 virus continues to spread globally.

 

U. S. Market Impact:

  • US Port Operations: US Ports, including The Port of Los Angeles are experiencing an increasing backlog of empty containers. Some carriers are requiring customers to hold on to equipment until further notice. This will result in increased costs related to chassis or off-dock storage that will be the responsibility of the importer. We will continue to monitor this situation and keep you updated on developments.
  • Reduction in Operating Hours at Ports and Container Freight Stations: Container Freight Stations have announced a reduction in hours due to a decline in volumes.
    • The NW Port Alliance (Seattle and Tacoma ports) has announced they will temporarily suspend Terminal 18 operations on Fridays beginning March 6, 2020. This action is a direct result of the drop in TEU volume resulting from COVID-19.  
    • An increasing number of Container Freight Stations in inland areas have announced reductions in operating hours.
  • Air Cargo: Air freight rates in general have spiked. At this time, rates of double or more the normal levels are being reported as well as extended transit times in several key markets.
  • Ocean Carriers: Space constrictions must be anticipated.  This is due to the significant number of ocean carrier blank sailings. Carriers have implemented a general rate increase for March 15th. We anticipate freight rates will increase due to capacity and equipment shortages. 

Recommended Actions:

  • US Importers and exporters are strongly recommended to communicate closely with their suppliers to forecast  production capability. This will provide you with the most realistic timeline to fill orders.
  • Make your bookings well in advance to secure space and rates. The fluid nature of this situation makes it difficult to give refined predictions regarding space and costs.
  • Air export shippers should first communicate with their consignees and confirm their ability to receive any upcoming shipments.
  • In addition to close communication with your suppliers, we encourage that you keep your sales or customer service representative up-to-date on your supply chain needs. This will allow us to engage with carriers and overseas offices to better assist you during this unprecedented event.  

As always, we will maintain close communication with our origin offices to ensure the continued movement of your goods. If you have concerns regarding shipments originating from a specific region, please contact our customer service representatives. 

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