Shanghai has lifted its Covid-19 related restrictions from June 1 paving the way for the full resumption of production and operations in the city after more than two months of lockdown.
Chinese state media said Shanghai will fully restore the normal order of production and living across the city starting from June 1, on the premise of containing the overall risk of Covid-19.
It said buses, the entire rail transit network and ferry services will resume operations from June 1 and private cars and corporate vehicles can ply normally except in areas designated as medium and high-risk for Covid-19, and those under closed-off management or restrictive control, among others.
The city also noted an action plan to speed up the economic recovery in Shanghai after the wide-ranging impact of the lockdowns.
"The city will promote work resumption in all sectors by expanding the scope of subsidies for enterprises' epidemic prevention and disinfection, stabilizing industrial and supply chains in the Yangtze River Delta, and smoothing domestic and international logistics and transportation channels," Wu Qing, Shanghai's deputy mayor said in a press conference.
Air cargo demand to pick up
Ahead of the full lifting of the lockdown, Flexport said it expects demand to "gradually pick up."
"With Covid cases dropping to below 100 per day, businesses should begin to resume work starting on Wednesday, June 1. The government will also revise the guidelines for epidemic prevention and control in regards to returning to work and production," Flexport said in a May 31 update.
"With the Dragon Boat Festival coming up this week, we expect demand to gradually pick up in the coming weeks. Flight and trucking capacity are also continuing to recover, with rate increases on both the TPEB and FEWB lanes," it added.
For South China, the freight forwarder noted that the market is "gradually continuing to improve."
It said TPEB demand is stable and rates are similar to last week, while FEWB demand is strong, particularly to the UK.
Congestion seen to worsen
In terms of shipping from Asia to North America, Flexport said "capacity remains up for grabes" as signs point to worsening congestion.
"Uncertainty remains as to what demand will look like when lockdown measures in China come to an end. Some warn that a sharp spike in demand will put pressure on destination ports and inland hubs once again," it said.
International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) labor negotiations remain underway too.
Flexport said for cargo ready now, importers might consider taking advantage of currently available space and softer floating market rates. Meanwhile, it noted that rate levels remain elevated relative to the pre-Covid market with softening in many major pockets, especially into US west coast (USWC) ports.
For Asia to Europe, Flexport said demand is picking up, but congestion is still having a widespread impact on capacity deployed on this route.
"Shanghai is slowly opening following a lockdown of almost 2 months. The third quarter is expected to be strong with a summer peak. However, there are many uncertainties on a macro level such as the Ukraine conflict, high inflation across Europe, and low consumer confidence," the freight forwarder added.
It said rates are also expected to increase in June due to tighter space.
"Overall space is starting to fill up again. Congestion in European ports is causing sailings to return to Asia late, resulting in additional delays and blank sailings," Flexport further said.
