Novel Coronavirus situation

Life and business in China continue to be strongly impacted by epidemic related interventions, but most recently we see strong indications that the government is preparing to slowly open China for business again, at least in those regions least affected by the coronavirus. As businesses and transportation infrastructure gradually open across the country, DSV China is increasing the number of staff members in our offices, while strictly maintaining safety measures to safeguard the well-being of our staff.

As the situation in China continues to evolve, we have updated our Q&A advisory to include the latest developments.

Key questions have been divided into four categories:

· DSV China update
· General market update
· Contingency measures at DSV
· General questions

Considering the disruptions, we understand that you are concerned how quickly supply chains and international shipping can resume normal operational levels now that China is reopening for business. In addition, there is a general concern that the market will almost certainly face capacity shortages for a period of time.

DSV is aware of these concerns and working proactively with our customers to understand shipping requirements for the coming weeks and to map these against available capacities. As one of the largest air and sea service providers we will fully utilize our global core carrier programmes to solicit additional capacities, as needed and available.

If you foresee significant shipping needs in the coming weeks, we encourage you to contact your dedicated DSV account manager who will assist you with the necessary planning and preparations.

We will continue to monitor the situation and keep you informed.

DSV China update

When will operations in China go back to normal?

Compared to last week, where many cities in China were either still closed for business or severely restricted, we can now see that many Chinese cities are opening for business. In cities where special permits are needed to work in offices, we may need to resume operations from home, but in most locations we strive to increase our staff in the offices in line with business requirements.

Can DSV in China still operate under the current circumstances?

Yes, to the extent operations can be handled in line with government regulations, we continue to service our customers as usual. While the current situation where many staff members are still work from home provides some challenges, our team in China works hard to mitigate the impact on business and customers as much as possible.

For specific concerns / questions in this respect, please contact your usual DSV contact.

Market update

What is the current situation at ocean ports, terminals and airports in China?

Ocean: While the activity level at many ocean ports in China has been reduced significantly, most ports have normalised operations and customs authorities are open. Quite a number of carriers have announced blank sailings and trucking companies have maintained operations although some have significantly reduced their activities.
Most CFS1 warehouses are open, but some in severely affected areas remain closed as per local governments’ instructions. It is expected that as Chinese factories start operating at full capacity again, the ports will get increasingly busy in the weeks to come.

Air: Airports continue to operate as usual; terminals, warehouses and customs are all open for business. At this point in time, air and ocean exports are well below normal activity levels. Due to the impact of the coronavirus, flight cancellations, mainly on passenger flights but also on some freighters, will continue until March. Combined with the reduced activity levels across China, these capacity reductions have been manageable so far. We recommend that you start a dialogue concerning your shipments with your DSV representatives as soon as possible, allowing them to map out individual solutions and prepare available capacities accordingly.


What is the latest situation on trucking shortages?

While trucking remains a key concern due to labour shortages and travel restrictions, several provinces such as Zhejiang and Jiangsu as well as Shanghai are working to significantly improve the situation, e.g. by easing border access through online driver registration. This is expected to bring some improvement to the situation and might further allow us to better utilize alternative transportation modes and ports in China to relieve the to-be-expected pressure points in Shanghai and other major transportation hubs.

DSV China is working closely with our core vendors and to protect significant transportation capacities for our customers.

Quarantines and other safety measures at destination ports?

In addition to the US and Singaporean authorities’ requirements concerning health declarations and temperature screenings of vessel crews which have been in China during the past 14 days, we are currently aware of the following:

- Philippines: Vessels from China are allowed to berth with restrictions on crew disembarkation.
- Vietnam: beginning 4 February, all import vessels from mainland China to Haiphong need to be inspected at Hon Dau island before they call on the Port of Haiphong.
- Australia: For Sydney, Port Authority of New South Wales employees will not board vessels where coronavirus is found/diagnosed, and pilotage services for ships will be delayed. For Brisbane port, all foreign trading ships scheduled to arrive at Queensland ports are required to report if any crew member have any of the COVID-19 symptoms / have been to China after 1 February. Such crew members must remain in isolation onboard the vessel and must not have personal interaction with Australian based maritime industry staff. All other Australian ports allow vessels to arrive as scheduled with crew restricted to stay on-board while berthing, amongst other precautionary measures.

Storage fees / demurrage for import shipments

Storage and demurrage fees will follow regular tariffs, unless otherwise informed.

Contingency measures of DSV

How is the situation at airfreight import warehouses at PVG? How about DSV?

Over the last two weeks, warehouse space at PVG (Pudong International Airport, Shanghai) has been under significant pressure, because the airport continued to receive cargo, while many consignees, in line with the general restrictions, did not proceed with customs clearance and delayed to pick up cargo from bonded warehouses.

We are aware that some of our competitors had to temporarily stop receiving import shipments, but the situation at DSV remains manageable due to a temporary expansion of our warehouse capacity.

How do all the passenger flight cancellations affect the airfreight market? What is DSV doing?

Overall market capacities have declined considerably due to passenger flight cancellations. This has driven rates into China up considerably and created bottleneck situations for airport warehouses at PVG.

Export capacities out of China are obviously equally affected, but so far this has not impacted rates and capacity availability too much, because freighters are still operating, and demand has been low ever since the epidemic started. This is expected to change over the next days and weeks as companies and factories return to work. We do foresee that especially the Transpacific and European trade lanes will get quite hot for a while, but also Intra-Asia we should see an increase in activity levels.

DSV is responding to this by strengthening our charter network solutions with additional freighter / charter capacities from our key European gateways in Frankfurt and Luxembourg, and our US gateway in Huntsville.

We have a lot of cargo backlog but what are the options other than ocean and air to move freight out of China?

In addition to our core products air and ocean transport, we also offer international rail, trucking and multimodal solutions such as for instance Sea-Air via Dubai.

· Rail: We have a dedicated rail team in place operating multiple rail services that connect key origins in China with destinations all over Europe, whether you cargo is FCL, LCL or buyer’s consolidation. While some services are closed or impacted by trucking restrictions, we can currently offer customers reliable solutions via rail. We are also working on a dedicated block train for early March
· Sea-Air: We have a dedicated Sea-Air setup in Dubai that connects key origins in China with European destinations. In addition, we are exploring alternative routes.
· Trucking: International trucking is currently not a feasible option as borders between China and many of its neighbours such as Kazakhstan, Russia and Vietnam remain closed. Once this changes, trucking can be considered a faster but also more expensive potential solution compared to rail.


General questions

Has any DSV staff members been infected with the Novel Coronavirus (COVID-19)?

To our knowledge, no DSV colleagues in China, Hong Kong, Macau or elsewhere have been infected with the coronavirus.

DSV is strongly committed to the safety of our employees while working to mitigate any potential impact on the supply chains and operations of our customers. To this end, we have established several preventive measures to safeguard the health and well-being of our employees.

What is DSV’s business continuity programme (BCP)?

DSV China has created a BCP working board overseeing all key activities during this critical period. The BCP team works to ensure that the entire DSV China organisation is well aligned and to keep all stakeholders informed about the situation and our contingency measures.