China Shanghai Pudong Airport log jammed – Medical Supplies for export

Freight gridlock at Shanghai Pudong International Airport is so bad that some cargo planes are being forced to leave nearly empty and logistics companies are recommending ocean transportation as a faster option. 

Airfreight professionals describe an operational meltdown, with trucks stuck in queues for two to three days to drop off shipments and boxes piling up in warehouses unable to get put on aircraft because Chinese customs officials and ground handlers are overwhelmed by the surge in export demand for face masks and other medical supplies.

The volume of hospital gear, resumption of e-commerce and other trade following China’s coronavirus quarantine and new export restrictions are blamed for the massive backlog, which was compounded by factories rushing out extra shipments before closing for the May Day holiday.

“In my 20 years, I have never experienced this level of congestion at any airport. And there are no signs of this alleviating in the next week to 10 days,” especially with factories reopening again, Neel Jones Shah, the global head of airfreight at San Francisco-based Flexport, said in an interview.

An avalanche of personal protective equipment, test kits and disinfectant is descending on Chinese airports because the rest of the world desperately needs it to minimize exposure to the COVID-19 virus and air is the fastest delivery method. China is the world’s largest source for respirator masks, surgical masks, medical goggles and protective garments, accounting for 50% of global exports in 2018, according to Chad Bown of the Peterson Institute for International Economics.

But the onslaught of goods is running into a bureaucratic wall and piling up. Last month, Chinese authorities placed export controls on 11 types of medical supplies, including infrared thermometers, after complaints in Europe and the U.S. about low-quality purchases. Chinese-made N95 respirators failed in several tests to meet filtering standards for small particles, while non-medical masks are also being sold as medical-grade ones. In addition to special certification, all the shipments must be individually inspected and verified by customs authorities to make sure they are not defective or fraudulent.

The risk-control office that certifies the medical equipment was closed for Chinese Labor Day and customs worked reduced hours during the holiday, adding to the bottleneck.

The process of opening boxes and going through the contents with a fine-tooth comb is very manual and adds at least three days to transit times, said Brian Bourke, chief growth officer at Chicago-based SEKO Logistics.

China’s new policy has forced freight forwarders to cancel many bookings because export shipments are regularly failing customs inspections. Most of them are demanding customers have cargo ready at least four days before a flight. It now takes five to six days for shipments to get from the manufacturer’s dock onto a plane, according to logistics companies in the area. 

Meanwhile, forwarders and consolidators are requiring all freight charges for protective garments be paid up front, 72 hours before departure, because the cost of chartering a dedicated plane at the eye-popping one-way rate of $1.5 million or more, is prohibitively expensive. Pre-payment is also desired because shipments may miss the flight’s cutoff time and result in the forwarder otherwise having to eat the loss.    

Delayed or rejected loads have a knock-on effect, too, because they need to be rebooked on later flights.

The most-affected transfer station is PACTL, a joint venture between Shanghai Airport Group and Lufthansa Cargo that controls three of the seven cargo terminals at Pudong Airport, according to a SEKO client advisory. Since May 3, Eastern Air Logistics’ western cargo terminal is temporarily not accepting any new charter flights in an attempt to clear the backlog.

Chinese social media sites show massive traffic jams of trucks, with no space to unload, on the entrance road to Pudong Airport. The wait is so long, Bourke said, that trucking companies have to rotate fatigued drivers via motorcycle.

Even after shipments are cleared, they can sit in a warehouse because ground handling companies often don’t have enough labor to consolidate shipments for aircraft loading, he added.

Light loading

Jones Shah, a former head of cargo at Delta Air Lines, Inc. (NYSE: DAL), and others who do business at Pudong airport say the increased tender times have forced multiple carriers on several occasions to depart only 10% or 20% loaded because of schedule commitments, or fears that pilots will violate duty-hour limits by waiting.

Under normal circumstances, cargo airlines typically change crews in China. Instead, flights are originating in Tokyo or Seoul. Upon arrival, crews stay on the planes to avoid being tested or quarantined by Chinese authorities keen on preventing outsiders from reinfecting the local population. If freighters stay too long in Shanghai, crews will time out their duty clock and violate anti-fatigue rules before reaching a refueling stop in Anchorage, Alaska, or U.S. destinations.  

“It’s a disaster right now.  . . . There is personal protective equipment that could have been coming to the U.S. just wasn’t able to because of this backlog,” Bourke said.

Contacted by FreightWaves, North American passenger airlines that now operate so-called “ghost” charters — planes without passengers flying dedicated cargo routes — downplayed the congestion’s impact on load factors.

“PVG [airport code for Shanghai] has some challenges as a result of a huge increase in volume and flights, but American Airlines Group Inc. (NASDAQ: AAL) has been able to fill nearly all flights to-date. Demand remains very strong and our handling partners have been able to process freight in time to meet our outbound flights,” Sandy Scott, managing director of cargo operations – Europe & Asia Pacific, said in a statement. “Limiting export deliveries to 48 hours prior to flight departure helps with smoothing the flows through the cargo terminal. American is in constant contact with all global account customers, local customers, and handling partners to ensure flights leave on time and with full loads.”

A Delta spokesperson said, “Delta Cargo is working with our ground handlers and contracted warehouse providers in Shanghai to improve the situation in light of congestion affecting all airlines. Delta is committed to continuing our cargo-only flights between Shanghai and the U.S.”

Air Canada has not had aircraft leave empty because of good planning that enables it to swap out shipments that are not ready for ones that are, said Tim Wong, director of cargo sales and services for Asia-Pacific.

Airfreight workarounds

Freight forwarders are employing a number of tactics to bypass the bottlenecks and say customers need to be open to quick course corrections.

Flexport works with airline partners to delay flights upline, “before they leave for Shanghai because then the crews can continue to rest and not start their duty day. And that gives us a little more time to have freight tendered and built,” Jones Shah said. “But it can get tricky. Flights have to get to their destination because they have another flight after that. So, you’re operating within the confines of a very intricate schedule. This is a 24/7 job right now managing the complexity.”

Other Chinese airports face similar problems, to a lesser degree. SEKO is trying to avoid Shanghai at all costs for now, instead sending most airfreight to Zhengzhou airport, a 10-hour drive west of Shanghai. Time:matters, the logistics arm of Lufthansa Cargo, and its Chinese agent, Shanghai International Freight Forwarding, are also arranging cargo-only passenger charters from airports in Xiamen, Malaysia, and Nanjing, China, spokeswoman Katja Sondey said.

Making matters worse is that Chinese regulations don’t allow personal protective equipment to be exported or transshipped through Hong Kong.

“That has created lots of backlogs and capacity issues in Guangzhou and Shenzhen as many airlines do not have landing rights in mainland China and is one of the reasons why rates are sky high,” said Christos Spyrou, the CEO and founder of logistics cooperative Neutral Air Partner, via email from Hong Kong.

Fast-boat services, like those offered by Matson, Inc. (NYSE: MATX) and APL, offer another relief valve for shippers. Matson, for example, sails direct from Shanghai to Long Beach, California, in 10 days.

“We’re telling people that sometimes it’s more of a sure thing to move via expedited ocean services. And that’s an education,” Bourke said. “When your airfreight guys are selling ocean, that’s when you know that the market is working in a crazy way.”

Jones Shah said shippers — especially those who are moving a lot of volume — need a diversified strategy when it comes to moving medical supplies.

“If you’re just moving one shipment of 500,000 masks, airfreight is the way to go. If you’re moving multiple shipments of 40 million to 50 million masks over the duration of a project, there is absolutely a hybrid, modal strategy that is going to get you there.

“It’s not just air or ocean that’s going to let you be successful. You need a combination of the two,” he said.

Europe doesn’t have an express-ocean option, so some logistics companies are increasing use of transcontinental rail from China to move urgently needed protective suits and related supplies. Imperial Logistics International said it took 20 days for the first batch of 45 containers with medical gear for health care workers to arrive in Germany by train.

Source: Benzinga, featured on Yahoo.com, 8 May 2020

WCO issues updated joint WCO/WHO HS classification list for COVID-19 medical supplies

The WCO continues its close cooperation with the World Health Organization (WHO) to contribute to the rapid cross-border movement of medical supplies and medicines needed urgently during the current COVID-19 global pandemic. Following the coordinated response adopted by the two organizations, a WHO/WCO List of Priority Medicines was released and the Joint WCO/WHO HS Classification List for COVID-19 Medical Supplies was further updated. 

The clinical characteristics of the COVID-19 and its evolution makes it challenging for the health system of many countries and shortage of medicines can worsen the situation. Potential supply chain disruptions may jeopardize the timely supply of all essential medicines, including those not directly related to COVID-19. 

The List of WHO/WCO Priority Medicines for Customs Used during COVID-19 aims at assisting Customs and economic operators in classifying these medicines. The list contains the suggested HS codes for medicines used in the general medical care administered to hospitalized patients; as part of the direct treatment of the COVID-19 disease; and for which interrupted supply could result in serious health consequences. 

The new list, which will now be continuously updated, is the result of an efficient collaboration between the WHO and the WCO. The medicines and active substances were compiled by the WHO taking into account various information published by National Health Authorities, scientific societies or pharmacology experts, and with suggested HS codes provided by the WCO Secretariat. 

The List of WHO/WCO priority medicines used during COVID-19 can be found on the WCO COVID-19 dedicated webpage.

HS classification reference for Covid-19 medical supplies 2.1 Edition

Taking into consideration the suggestions received from Members and other stakeholders, the WCO/WHO HS Classification Reference for Covid-19 Medical Supplies was once more updated with additional items that could be used during this pandemic situation. COVID-19 medical supplies list update:

Future initiative foreseen by the WCO for COVID-19 medical supplies list

The WCO is aware that some countries have used the WCO list as a reference when making their own national lists of medical supplies. In order to further facilitate trade in medical supplies and present information in a coordinated manner, the WCO is considering, for the next edition of the medical supplies list, to include links to specific national classification lists of medical supplies.  Members wishing to include information on their national classification lists of medical supplies can send their links to: hs@wcoomd.org

Further assistance in identifying essential items can be found on the website of WHO. The COVID-19 Critical Items List from the WHO can be found at:

https://www.who.int/emergencies/diseases/novel-coronavirus-2019/technical-guidance/covid-19-critical-items

Source: World Customs Organisation, 30 April 2020

Uganda – Road Transport to adopt Relay System to accommodate COVID-19

The National COVID-19 Taskforce has agreed that all trucks entering Uganda will have only one person on board for the next four weeks in a move to control the movement and exposure of Ugandans to foreign truck drivers. 

The meeting which was convened yesterday decided that drivers will have to implement the relay system-where a designated driver drives to the Ugandan border and from there on, another from Uganda who has tested negative for COVID-19 continues with the rest of the journey.

For the last two weeks, truck drivers have undergone mandatory testing at the borders but have been allowed to continue with their journeys before the release of their results. In the process, the drivers who have tested positive have come into contact with several Ugandans. As of today, 18 drivers have tested positive and over 300 contacts are being monitored and traced.

With the new measures, new truck parks or stops have been designated. Drivers who have been tested for COVID-19 and are waiting for their results will stop under the surveillance of security officers to wait for their results.  Once results are released, drivers who test positive will be picked up by health ministry officials while those who test negative will be allowed to continue with their journey.

Different routes will have three stops. Route one will cover drivers from Kenya. These drivers will be able to stop at either Namboole, Lukaya, Ntungamo/Ishaka and the border. Route two also from Kenya will have drivers stop in Soroti or Kamdin corner. Trucks from Tanzania travelling to Kampala will cover route three and stop in Karuma and Packwatch.  Route four will cover trucks from DRC. The trucks will travel from Fortportal to Mubende and then Namboole. 

All other stop points that were previously used by the trucks such as; Tororo, Mbale, Lira, Kamdin, Mbikko, Naluwerere, Lyantonde, Namawojolo, Sanga, Ruti, Migyera, Luwero have been closed.  No truck is allowed to make stops there.

The new measures come following an outcry from Ugandans after several truck drivers carrying cargo from Kenya and Tanzania tested positive for COVID-19. Many had called for the closure of all border entry points.

Dr Monica Musenero, an epidemiologist and also a member of the task force says that the new measures are going to be implemented starting next week. She says that all the measures that have been set up are geared towards protecting Ugandans.

The task force also decided on reducing the number of fuel trucks that cross the border. According to Dr Musenero, railway services are going to be used to transport fuel.

“ We want to reduce the number of trucks entering the country. The railway freight services are going to be brought on board so that some things like fuel can be transported using the railway,” Dr Musenero adds.  

Other measures that were discussed and passed include; the mandatory use of personal protective equipment like masks by all drivers. Also, domestic trucks should have only two people. In addition to this, freight forwarders will have to pay for testing kits to be used to test drivers.

Source: The Independent, Uganda, 26 April 2020

Update to SARS Customs requirements under COVID-19

Visit the SARS Customs & Excise Webpage for an update on Customs import and export requirements under COVID-19.

The update can be accessed at this link!

Source: SARS, 19 April 2020

Functional Guideline for Importing Critical Supplies and Essential Goods under Rebate Item 412.11

Business Unity South Africa has published a Standard Operating Procedure (SOP) to provide functional guidelines for businesses importing critical supplies and essential goods into South Africa under Rebate Item 412.11 and Schedule 1(8) of the Value Added Tax Act, and includes both imports of dutiable and duty-free goods.

Source: BUSA, 9 April 2020

COVID-19 Reference page for Customs and Trade users

A dedicated COVID-19 page has been added to this blog to provide Customs and Trade users a reference and insight into a variety of international and South African weblinks and documents concerning guidelines under COVID-19. This page will be updated regularly to include additional links and updates to any relevant document or website referenced. Please bookmark this page to be kept abreast of updates.

WCO-WTO join forces to minimise disruptions to cross-border trade in goods

The heads of the World Customs Organization (WCO) and the World Trade Organization (WTO) issued a joint statement on 6 April pledging to work together to facilitate trade in essential goods such as medical supplies, food, and energy.

WCO Secretary General Dr. Kunio Mikuriya and WTO Director-General Roberto Azevêdo said the two organizations would work closely together to minimize disruption to cross-border trade in goods – in particular those essential to combat the COVID-19 pandemic – while safeguarding public health.

They also pledged to establish a coordinated approach to support initiatives that facilitate cross-border trade so that essential goods can quickly reach those most in need, including in least developed and land-locked countries. WCO and WTO members have already been invited to increase transparency by sharing information on new trade and trade-related measures introduced in response to the COVID-19 pandemic.

“As COVID-19 continues to spread globally and governments consider new measures to protect the health and well-being of their citizens, we urge Members to ensure that any new border action is targeted, proportionate, transparent and non-discriminatory,” they declared.

The text of the joint statement is below.

WCO-WTO Joint Statement on COVID-19 related trade measures

The COVID-19 pandemic, while above all a public health crisis, presents the world with unprecedented social and economic challenges.  Emergency measures needed to curb the spread of the disease have unintended impacts on the world economy and trade, including the global supply chains that produce and distribute essential goods such as medical supplies, food, and energy.

To support the ongoing efforts to mitigate the social and economic effects of the pandemic, we, the Secretariats of the World Customs Organization (WCO) and the World Trade Organization (WTO), agree to work closely together to minimize disruption to cross-border trade in goods – in particular those essential to combat COVID-19 – while safeguarding public health. We commit to provide appropriate support to all relevant stakeholders. 

Within our respective mandates, we have already invited Members to increase transparency by sharing information on new trade and trade-related measures introduced in response to the COVID-19 pandemic. To the extent appropriate, we are making such information publicly available through our respective websites.  

We are also willing to establish a coordinated approach in support of initiatives that facilitate cross-border trade in goods, in particular those key to combat COVID-19. This would allow that essential goods can quickly reach those most in need, including in least developed and land-locked countries.

As COVID-19 continues to spread globally and governments consider new measures to protect the health and well-being of their citizens, we urge Members to ensure that any new border action is targeted, proportionate, transparent and non-discriminatory – as agreed by G20 leaders. We stress that these measures should be temporary, and we encourage Members to rescind them once they are no longer needed, especially if they restrict trade. We welcome initiatives to facilitate and simplify cross-border procedures and urge our Members to prioritize those for exporting and importing essential goods. 

As the pandemic evolves, we will continue to further explore ways to coordinate the efforts of the two organizations in response to the COVID-19 pandemic aimed at keeping trade flows open for the safety of populations around the world and a strong recovery of the global economy.

Source: WCO webpage, 6 April 2020

World Bank -Trade and COVID-19 (Coronavirus)

Photo: Martin Sanchez, Unsplash

Maintaining trade flows during the COVID-19 pandemic will be crucial in providing access to essential food and medical items and in limiting negative impacts on jobs and poverty.

The speed and scale of the crisis are unprecedented. But governments can ameliorate the impact. The following documents, hyperlinked to this page provide initial guidance for policymakers on best practices to mitigate pandemic-related trade risks, support trade facilitation and logistics, and implement trade policy in a time of crisis.

Managing Risk and Facilitating Trade in the COVID-19 Pandemic

Maintaining trade flows as much as possible during the COVID-19 pandemic will be crucial in providing access to essential food and medical items and in limiting negative impacts on jobs and poverty.

Some countries are closing border crossings and implementing protectionist measures such as restricting exports of critical medical supplies. Although these measures may in the short-term provide some immediate reduction in the spread of the disease, in the medium term they may undermine health protection, as countries lose access to essential products to fight the pandemic. Instead, governments should refrain from introducing new barriers to trade and consider removing import tariffs and other taxes at the border on critical medical equipment and products, including food, to support the health response.

Trade facilitation measures can contribute to the response to the crisis by expediting the movement, release, and clearance of goods, including goods in transit. The World Bank Group provides guidance and technical assistance to developing and least developed countries to implement best practices to facilitate the free flow of goods.

Download the Guideline here!

Do’s and Don’ts of Trade Policy in Response to COVID-19

Despite the initial inclination of policy makers to close borders, maintaining trade flows during the COVID-19 pandemic will be crucial. Trade in both goods and services will play a key role in overcoming the pandemic and limiting its impact in the following ways:

  • by providing access to essential medical goods (including material inputs for their production) and services to help contain the pandemic and treat those affected,
  • ensuring access to food throughout the world,
  • providing farmers with necessary inputs (seeds, fertilizers, pesticides, equipment, veterinary products)for the next harvest,
  • by supporting jobs and maintaining economic activity in the face of a global recession. Substantialdisruption to regional and global value chains will reduce employment and increase poverty.Trade policies will therefore be an essential instrument in the management of the crisis.

Trade policy reforms, such as tariff reductions, can contribute:

  • to reducing the cost and improving the availability of COVID-19 goods and services,
  • to reducing tax and administrative burdens on importers and exporters,
  • to reducing the cost of food and other products heavily consumed by the poor and contributing to themacro-economic measures introduced to limit the negative economic and social impact of the COVID-19 related downturn,
  • to supporting the eventual economic recovery and building resilience to future crises.

Governments with industries producing COVID-19 medical goods or food staples can further contribute by committing to refrain from limiting exports through bans or taxes. If export restrictions must be used, then they should be targeted, proportionate, transparent, and temporary.Measures to streamline trade procedures and facilitate trade at borders can contribute to the response to the crisis by expediting the movement, release, and clearance of goods, including goods in transit, and enabling exchange of services.

Reforms can be designed to reduce the need for close contact between traders, transporters and border officials so as to protect stakeholders and limit the spread of the virus, while maintaining essential assessments to ensure revenue, health and security. Interventions to sustain and enhance the efficiency of logistics operations may also be critical in avoiding substantial disruption to distribution networks and hence to regional and global value chains.

Download the Guideline here!

Trade in Critical COVID-19 Products

The covid-19 pandemic is increasingly a concern for developing countries. Using a new database on trade in covid-19 relevant products, this paper looks at the role of trade policy to address the looming health crisis in developing countries with highest numbers of recorded cases. It shows that export restrictions by leading producers could cause significant disruption in supplies and contribute to price increases. Tariffs and other restrictions to imports further impair the flow of critical products to developing countries. 

Download the Guideline here!

Also view the Blog post – Viral protectionism in the time of coronavirus

Source: World Bank, 1April, 2020