A recent Covid-19 outbreak at Shanghai Pudong International Airport (PVG) and new quarantine measures being implemented in the hub are adding extra pressure to the already-strained airfreight operations in China threatening further delays in the movement of goods out of the world's third busiest cargo airport.
As of August 24, cargo operations at a terminal of Shanghai Pudong remained suspended for a fifth consecutive day following increasing number of coronavirus cases among its staff, prompting flight cancellations or diversions and disruption in customs-clearance process. This has also pushed cargo prices higher — putting more pressure on the still-fragile supply chains.
Logistics analyst project44 said the outbreak took place at ground handling agent Shanghai International Airport Services (SIAS), which handles operations for major cargo carriers including Air China, Qatar Airways, and Cathay Pacific.
In a statement, Cathay Pacific Cargo announced the freighter services disruption at Shanghai PVG.
"We regret to announce that freighter handling capability at PVG is heavily affected due to tightened Covid-19 preventive measures," it said on August 20, although noting that Cathay Pacific passenger flights will continue to operate as scheduled.
"We are working closely with the authorities and our service providers to operate as many scheduled freighters as possible, meanwhile looking into the possibility of operating into alternative ports in the Chinese mainland," it added.
Health authorities had detected at least five cases among cargo workers at the airport by August 21, prompting airport authorities to suspend ramp operations that led a number of carriers to suspend freighter flights and cargo-only passenger flights until further notice.
PVG remains open to passenger flights with a limited workforce; however, the growing backlog of air cargo shipments and increasingly limited air cargo capacity has prompted multiple freight forwarders to stop accepting bookings bound for PVG and warn of delays for export shipments.
Significant delays, serious backlogs
In a notice, project44 warned customers seeking to import or export out of China to "anticipate significant delays due to the outbreak as shipment backlogs will build and diversions to other airports will add to transit times."
"With significant delays and backlog expected over the coming days as airport authorities implemented sanitation protocols for hundreds of employees, the closure at PVG has already led Japanese car maker Mazda to suspend operations at its plants in Hiroshima and Yamaguchi due to disrupted supplies of in-vehicle components using semiconductors," it said.
SEKO Logistics also talked about the "serious backlog" piling up in PVG.
"One of the two terminals in Shanghai PVG airport, PACTL has suspended cargo aircraft business and is now only accepting aircraft cargo operations, due to two confirmed COVID-19 cases," SEKO tweeted on August 20.
"The impact of this suspension will see a serious backlog in PVG in the coming days. Airlines are diverting flights to airports to the South or West of China. PO [Polar Air] and QR [Qatar Airways] airlines are looking to divert flights to other airports such as SZX [Shenzhen], CAN [Guangzhou], or CGO [Zhenghou]," SEKO added.
It noted that other airlines are diverting also their flights to Hong Kong and other airports, as some forwarders are "considering alternative export methods such as Ferry-Air via Korea and Sea-Air via SIN [Singapore] or DXB [Dubai]."
The airfreight unit of Maersk also noted ramp disruptions at Shanghai Pudong Airport prompting "large numbers" of freight cancellations.
"This advisory is to provide you with information concerning the recent COVID-19 flare-up’s impact on airport terminal operations across China and especially for Pudong International Airport in Shanghai," it said, adding that a series of protocols being implemented to prevent transmission of the coronavirus is impacting freighter and passenger flights.
"As part of this effort, airport terminals and ground handling agents have implemented strict isolation requirements for their employees that has dramatically impacted the efficiency of unloading/loading of cargo and resulted in large numbers of flight cancellations," Maersk Freight added.
Ramp operations suspended
"... Due to new Covid-19 cases, authorities have decided to suspend a large portion of ramp operations (including aircraft unloading/loading) until further notice," it added, referring to the increasing cases at PVG.
"In response [to the suspension], many airlines have announced their suspension of flights to Pudong Airport. Several flights on the ground in Pudong Airport are now pending further instructions if they may proceed for unloading/loading their planned payload."
Maersk Freight noted that due to these developments at PVG, it said it "foresees delays and longer transit times are likely to occur."
Freightos market data showed that air cargo rates between Asia-US and Asia-Europe spiked between 20% to 40% so far this month with recent disruptions expected to "keep pushing prices higher."
project44 said in its analysis that the recent outbreak in PVG exacerbates backlog of air cargo shipments that has been building up for months.
"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," project44 said.
Quarantine measures at PVG
The logistics analyst noted that in early August, PVG was only operating at 33% of capacity as workers were required to follow a policy known as "7+7+7" — which means working for one week, quarantining in a hotel for one week, and then quarantining at home for another one week.
"The suspension of operations at SAIS has resulted in some flights leaving PVG without cargo or being severely delayed due to limited manpower. Cargo handling times have reportedly been 2-3 times longer than average, also partly due to high turnover among staff due to the stricter quarantine rules," project44 added. "The affected airlines will temporarily stop operating cargo-only passenger flights and freighters to PVG until further notice."
Meanwhile, it said that Qatar Airways, Air Bridge Cargo, and Polar Air Cargo have diverted future shipments to either Guangzhou International Airport (CAN), Zhengzhou International Airport (CGO), and Shenzhen Bao’an International Airport (SZX)China Eastern Airlines and China Southern Airlines have announced cancellations on many of their US-bound flights from PVG.
Similarly, Etihad Airlines, Lufthansa Cargo, and American Airlines have all cancelled flights departing from the airport in recent days.
In its advisory, it told custormers to use airlines still operating out of PVG (Cargolux, Nippon Cargo, ANA, Kalitta Air, and SF Express); or use trucking services to alternative gateways such as Hong Kong for onward flights into North America or Europe.
"Freight forwarders have also turned to different forms of transportation such as shipping to Singapore via ocean and then flying from Singapore Changi Airport (SIN) to final destinations, all of which are likely to increase to transit times," project44 said.
"Disruptions to cargo operations are expected to continue in the coming weeks as it remains unknown when flight schedules will normalize at PVG. Ongoing limited air cargo capacity will likely further increase spot rates that have already climbed by more than 6% month-over-month," it added.
