USA COVID ADVISORY – MARKET UPDATE

DUE TO THE OMICRON VARIANT AND SIGNIFICANT INCREASE IN CASES, MOST MODES ARE EXPERIENCING IMPACTS AND CONGESTION – BELOW IS A HIGH LEVEL RECAP ACROSS MULTIPLE MODES.

SEKO USA RESIDENTIAL INSIDE DELIVERY RESTRICTIONS:

Please see below list of SEKO stations that are currently not performing inside deliveries due to COVID.  If any changes are made to your station’s policy please be sure to notify corporate immediately or the assumption will be that there has been no adjustment.  We will continue to monitor the situation and update the field. 

COVID-19 (+ WEATHER) AIRFREIGHT IMPACT

Due to weather and COVID-related staffing shortages, more than 2,500 flights have been cancelled today. We are now at an unprecedented 13 straight days of more than 1,000 daily flights cancelled. Airlines are also reducing their flight schedules pre-emptively throughout the month of January as COVID cases continues to increase significantly around the United States.

Due to the recent  winter weather conditions, rising COVID cases, and heavy passenger and baggage loads, we are currently experiencing challenges moving freight to and from many cities throughout the Continental US via Domestic Airfreight. 

These continued disruptions have led to a number of flight cancellations, service restrictions and temporary Cargo terminal closures over the last two weeks, and these challenges have compounded recently this week through and past the very busy holiday travel season.

Unfortunately, conditions have not improved in some of the major Cargo hubs throughout the US, and we are seeing and further restrictions implemented by our Carrier partners to try to recover from these recent disruptions

At SEKO, our teams are working very hard to ensure we are able to utilize all of our resources and partnerships to ensure that your shipments are flown as booked, and at times we may be forced to use all available routings to keep your shipments moving.

While some of our carrier partners are reducing operational hours at their cargo facilities, SEKO locations are staying open late and opening earlier to ensure we remain flexible through these very challenging conditions. This added flexibility allows us to secure bookings in alternative routings and carriers and our locations are staffed at the highest levels to make sure our customers shipments are moving on the most efficient flight plans.

Although we would have preferred to be able to offer more advanced communication and be able to plan our operational resilience a bit more proactively, conditions have deteriorated rapidly causing us to focus on keeping your business moving. We are continuing to monitor and manage the situation and hope to be able to share more regular updates as the situation evolves.

Our overall goal is to continue to work with our partner Carriers towards recovery and look forward to the resumption of more normal operations as soon as possible.

We are very thankful for your support and patience as we work through these challenging circumstances.

HONG KONG AIR FREIGHT MARKET

While the impact of Cathay Pacific’s flight suspensions is being felt in Hong Kong, with a huge backlog in the market for the remaining airlines, in mainland China, it is business as usual.

One significant change that we are seeing in the market is that charter operators, either master loaders or large freight forwarders are now requesting cash payments before shipment, which is a relatively new development over the last few months. This is a strain on working capital for all forwarders.

Hong Kong Impact

Cathay’s long-haul flight suspension has created a huge backlog in the market for import and export alike.  With rates having started to go up due to these cancellations and the current crew restrictions, or extended quarantine period for the crew is making it impossible for charter operators and any new operators to come to Hong Kong. The only possibility for transpacific is to have the crew in Japan or Korea, or Europe-bound flights to have in Bangkok or Hanoi to serve China and Hong Kong markets. These measures will add additional cost of operations, thus further rate increases expected in the market.

Exports to the USA

Airline cancellations are influencing capacity, with space to Miami, Atlanta, and Mexico critical.  This is due to Cathay cancellations, being the main provider of space in the Hong Kong market for these destinations.

Exports to Europe

The capacity situation to Europe is currently not too badly affected, however, the UK is experiencing space issues out of Hong Kong with the Cathay cancellations.  Currently, the only options to the UK are with indirect flights via Singapore Airlines, Emirates, Qatar, Turkish or Ethiopian.  Other solutions we have investigated would not be economically viable.

This situation will be ongoing in the lead-up to the lunar new year holiday.

USA OCEAN PORT ADVISORY

GREATER CHINA ADVISORY

Please see below for brief update of the current situation in China.

In the run up to the Lunar New Year there will be more delays, so please ensure you discuss this with your clients so that they are aware there may be disruptions to their shipments.

Ningbo

Although the district of Beilun, close to some ocean terminals remains locked down, ocean freight is still not directly affected by this outbreak and operating as normal but with the standard current congestion.  Trucking remains affected, particularly in the Beilun area with driver permits still required and strict measures for drivers.

Zhengzhou

Acid test reports within 48 hours is required to enter and exit the airport and port of Zhengzhou, currently no obvious impact on the import and export operations in CGO terminals as no new cases have been found in the working area.

Shenzhen

Following a recent small outbreak, Nucleic acid test report within 48 hours is required to enter and exit the airport and port of Shenzhen. Some SEKO staff are working from home due to positive cases close to their homes.

There was a lockdown of an ecommerce operation center 3 days ago, which caused the ecommerce business to stop in SZX terminal and the rumour is the center will be reopened in coming 1-2days. This has impacted some Ecommerce flights which have been cancelled. There is currently no impact on general cargo operation.

SEKO staff are still working in the office for now.

Key Status Updates:

LAX/LGB EMERGENCY PORT FEE

In an effort to reduce congestion at the ports of LAX/LGB a LAX/LGB an Emergency Port Fee has been implemented. The intent of the fee is to encourage customers to move containers out of the port as quickly as possible to allow for a proper flow to exist.

Please be advised that the fee has been now been postponed until January 17, 2022.

• When will the fee come into effect? ​​​​​The program will go into effect on the 1st of November, but penalties will not be assessed until effective the 15th of November. This two-week grace period has been given to allow shippers with the appropriate time to clear the docks. Should material progress be made, it is at the discretion of the Port Executive Director to extend that effective fee assessment date even further.
   
• Does it affect containers already on terminal (retroactive charges) or just containers discharging Nov 1 or later? To the best of our knowledge, charges will be applied retroactively for all containers on terminal effective Nov 15th.
   
• ​​How will the fee be assessed? The fee will be assessed on all containers dwelling for 9 days or more on truck moves or for 6 days or more for rail bound containers. The 9th day and 6th day respectively will be the first charge day.
   
• What is the fee structure? The fee will be $100 for day 1, $200 for day 2, $300 for day 3 and so on.
   
• Will it be applied on calendar or working days? The surcharge will be applied based on calendar days, inclusive of Saturdays, Sundays, and holidays.
   
• How will the rail delays be handled? We are still working with the terminals to have this clarified but to the best of our knowledge, the fee will still be applied.
   
• Will the charge be applied to containers where the rail providers are metering the flow of freight out due to congestion at inland rail points? We are still working with the terminals to have this clarified but to the best of our knowledge, yes it will be applied.
   
• Will there be a maximum cap on the fee, or will the charge continue for the duration the container is on terminal/rail? There is no maximum cap on the fee that will be applied.
   
• Will containers held for Customs Exam be exempt? No, we expect all containers to be subject to the fee irrespective of release status.
   
• Will the new surcharge be applicable for SD moves where the SSL controls the move? Even for SD, the fee will be applicable if the delay was caused by a line or customs hold, or when the cargo is subject to an exam or any government inspection.
   
• Who will bill the new surcharge and how will it be collected? We expect the Port Authorities to bill the SSL and for the charge to either be billed directly to customers or for the terminal operator to collect the same on our behalf prior to the release of cargo.
   
• What if I am unable to pick up my container due to a lack of chassis, will the emergency surcharge be waived? We are unfortunately unable to waive a government-mandated fee due to lack of chassis. For CY and SD moves, the trucker nominated by the customer is responsible to secure chassis.
   
• Who is responsible for the fee if the container is not available by the terminal? We are actively working with the terminals to clarify.
   
• If an appointment pickup time is not available, how is this fee fairly assessed (on a per-day basis) and handled? We are actively working with the terminals to clarify.
   
• For holiday scheduling, will the fee window be adjusted? We are actively working with the terminals to clarify.​​​​​​

2022 – Next Dates on the Horizon: Chinese New Year 2022 will fall on Tuesday, February 1st, 2022. As a public holiday, the country will generally celebrate with 7 days off from work from January 31 – February 6 in 2022. The 2022 Winter Olympics, officially the XXIV Olympic Winter Games and commonly known as Beijing 2022, are an upcoming international winter multi-sport event scheduled to take place from 4 to 20 February 2022 in Beijing and towns in the neighboring Hebei province in the People's Republic of China.