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Global Update: May 22

The World Trade Organization (WTO) released a report on May 20 covering trade indices for various sectors, noting that global trade may further contract in the first half of 2020. As consumer spending and business acquisitions shift, countries may find promising growth in emergent sectors such as advanced machinery, electronics, telecommunications, perishables, and medical equipment.

Civil aviation authorities have addressed infection concerns with new policies for passenger travel, but implementation is easier said than done as operators, port owners, and carrier representatives urge resumption of flights. To avoid a potentially global depression, there is a concerted effort to drive air freight capacity as more countries lower lockdown restrictions: operating airlines are offering reduced prices on select passenger bookings, many airports are unveiling stricter infection safety measures, and a number of governments are relieving domestic travel bans. However, consumer demand is still affected by ongoing news of the pandemic and other enduring issues.

In the maritime sector, port authorities and industry organizations are making further investments in automation and wireless technology. Blank sailings by global carriers are expected to drop off in the second and third quarter as carrier alliances optimize shipment routes.

Rail transport is also gaining favor in Asia, Europe, and the Americas, and regional blocs make plans to fortify their supply chain infrastructure, especially as sea freight rates offset demand in Far East routes and blank sailings take entire quarters to call off.

AUSTRALIA  International borders are still closed though lockdown restrictions have been eased in several states as businesses and consumer spending resume. After banning some Australian beef exporters and raising tariffs on Australian barley, China is also targeting other goods such as metals, wine, and dairy.

BANGLADESH Container pileup persists at privately owned inland depots surrounding Chattogram Port. The frequency of international charter operations at Dhaka’s Hazrat Shahjalal International Airport have increased in the past weeks owing to decongestion of supply chains, but IATA reports suggest that the country’s aviation industry is on the brink of economic collapse, such that the Civil Aviation Authority of Bangladesh (CAAB) has asked the government to waive taxes and associated charges along with a fuel price reduction.

BRAZIL Brazil has cut tariffs for industrial materials and essential goods, speeding up customs clearances on imports. Additional cargo ships have been placed in quarantine in the Port of Santos—all infected crews are required to be tested and isolated. The pile-up threatens to impede port operations, which is already handling record levels of exports of soybeans, sugar, coffee, and other produce. Major urban centers beyond Sao Paulo have also instituted lockdowns as state governments in Fortaleza, Belem, and Rio de Janeiro note citizens disobeying social distancing guidelines and shortages of hospital space.

CANADA Air Canada will be laying off 20,000 workers following a 95% flight reduction over first quarter. However, the airline has increased the number of passenger-to-cargo flights to international destinations, opening capacity for Europe, Asia, and Oceania destinations. At present, international airports in Vancouver, Toronto, Montreal, and Calgary remain open for passengers and have expanded screening capabilities; however, flights continue to be predominantly for medical, cargo, or repatriation purposes. Borders with the US remain partly closed to non-essential traffic for another month.

CHINA The government has lifted restrictions on all-cargo flights departing from Beijing, and all airlines can operate at the capitol’s two airports—prior to the ruling, only China Postal Airlines could use both. This move adds cushion to existing capacity as US and Europe routes see a heavy influx of PPE shipments. Due to the recoveries of neighboring countries, intra-Asia traffic ex-China is also normalizing. Following a strong performance in April, Ningbo Port sees numerous improvements to connect with neighboring ports Zhoushan and Yiwu, increasing shipment handling, storage, and accessibility.

EGYPT Public transport will be halted from May 24 for six days as all Muslim communities celebrate Eid Mubarek, the end of Ramadan. Businesses and public areas will remain closed and the government is also emphasizing social distancing measures. Airports begin installing high-resolution thermal cameras to detect potential infections in efforts to allay passenger fears from summer travel. The Port of Alexandria reported full operations and hectic shipping schedules as the Minister of Transport toured the area last weekend. The Suez Canal continues to experience lessened activity as key countries remain in states of economic recovery.

GERMANY News reports assert that the country has entered an economic recession as protests spark up in parts of Berlin, Munich, Stuttgart, and others. The German and French governments have announced a joint European recovery fund of €500 billion ($543 billion) to support affected economies in the 27-state EU bloc. Port of Hamburg reports a slight drop in cargo from Asia as imports from US nudge up softly. Since its reopening on May 15, Frankfurt Airport has promoted stricter infection control measures to increase passenger demand.

HONG KONG Border traffic between Hong Kong and China has been smooth since the regulation of driver screenings began one month earlier. The Hong Kong government announced a partial resumption of public facilities and services beginning May 21. Sea freight operations at the Hong Kong and Shenzhen ports remain unaffected. At least 14 scheduled blank sailings have been enacted by carriers through May, hurting overall capacity throughput. However, transit times to key destinations such as Australia, Philippines, and India, have peaked. Although Hong Kong International Airport remains open, arrivals are subject to an eight-hour quarantine and inspection process. Although the airport has seen a 24.3% year-over-year boost to cargo operations, its passenger throughput has fallen 99.5%.

INDIA The government has extended lockdown to May 31. Commercial passenger flights are banned until June. Businesses are slowly reopening with strict guidelines and public life outside specific containment zones is permitted, although social distancing measures are encouraged. Passenger charters are operating intermittently for short haul trips. State-owned seaports reported a 21% drop in cargo throughput last month due to decreased demand, tied up imports, or spotty trucking schedules. Pharmaceuticals and textiles are among the hardest hit as India produces for a significant amount of global demand.

INDONESIA Indonesian airlines resume domestic passenger flights with strict health protocols following relaxation on passenger travel; however, news has emerged that the protocols have not been enforced in major airports. As a response, the government has resumed lockdown on May 17 as the infection rate soars by 80%. In Jakarta, the Port of Tanjung Priok has seen a slight dip in container throughput owing to decreased trade with global suppliers and consumers, but operations are stable. Carrier alliance ONE announces a new Intra-Asia service covering ports from Indonesia to China.

JAPAN Traveler bans remain in place for 70 countries. ANA announces the resumption of cargo flights between Narita and Wuhan on May 19, with intent to increase to tri-weekly flights by May 31. Key sectors that will benefit from this move are automotive, electronics, and medical equipment. The government has not issued statements on when or how the emergency restrictions will be lifted.

KOREA Despite decrease in shipments worldwide, Incheon Port noted a 1.3% rise in year-over-year cargo throughput, attributed to the quick recovery of China’s industrial sector and continued operations in Southeast Asia. Incheon International Airport Corporation will launch new incentives and marketing for the passenger and cargo sector to support the aviation industry. Air carriers expect to reopen international passenger flights from June 1 onwards, but the government is undecided after a third string of infections in Incheon was reported in the week of May 13.

MALAYSIA The country’s economy restarts with a partial lockdown as the national infection rate slowly declines. The government resumes trade purchases with India, swapping palm tree oil for rice, which will raise sluggish port activity in the coming months. Airports are expanding both traveler protections and amenities in preparation for post-lockdown business, and Malaysian Airlines is also promoting screening, disinfecting, and maintenance procedures to build consumer trust. Due to an increased demand for safety equipment from neighboring countries, state-owned cargo carrier MAB Kargo recorded gains in activity through first quarter.

MEXICO Regional and domestic airlines are offering passenger deals, including unlimited flight packages, to stoke demand as the government, under pressure from citizens and industry interests, lifted lockdown measures on May 18, although the auto industry is requested to resume operations on June 1. A new border entrance near the Mexicali-Calexico station is under construction as part of a larger plan to modernize Mexico-US border infrastructure. The government has agreed to extend US-Mexico border closure for non-essential travel until June 24, pending updates. Two new cranes have been installed at the Port of Manzanillo to increase handling operations, although the port has also recorded steep falls in oil and gas cargo activity.

PHILIPPINES Although the new zone distinctions by the government were set up to allow certain cities and regions to reopen, an influx of consumers filling public spaces resulted in an increase in COVID-19 cases over the weekend. Meanwhile, carriers continue passenger-to-cargo flight—Philippine Airlines recently confirmed that all domestic and international passenger flights at key hubs will not restart until May 31 per government restrictions. On May 19, a new inspection unit was created to provide additional inspection to medical and PPE-related shipments at all ports of entry.

SINGAPORE The Port of Singapore reported a 5% year-over-year drop in cargo throughput. The government will open Changi Airport for travelers on June 2 and hopes to slowly reopen its borders to countries with low infection rates. Schools will also resume at the same time, and sectors engaged in “critical, low-risk economic activities” will be allowed to resume work. The country’s Maritime and Port Authority is also amending rules for vessel crew changes to comply with seafarer trade unions, which have given governments until June 15 to resolve crew change discrepancies.

SOUTH AFRICA As fruit-picking season comes in bloom, exporters report that port congestion, reefer equipment shortages, and changing trucking regulations may impact cargo. The Port of Durban reports long trucking queue as non-essential cargo continues to pour in. In a turn of events, the previously liquidating South Africa Airways will receive a 3.8 billion ZAR ($211 million) bailout in a May 20 announcement following meetings with the country’s public enterprises oversight committee.

SPAIN The Port of Valencia will be one of the eight ports of Spain to allow shipping access to the country to minimize the risk of importing more coronavirus cases. The Ministry of Transport and Mobility has also designated five airports as the only points of entry to Spain by plane, a measure that, as in the case of ports, will be in force to May 24. The government has approved a two-week extension of the lockdown on May 20.

SRI LANKA The government mulled on decisions to further develop the Port of Colombo into a full maritime hub, as the port currently provides mostly transshipment services. As the outbreak recedes, the Ports of Colombo and Gallo have also restarted crew change services using the Mattala Airport, which is currently closed for commercial flights. As reported, Sri Lanka Airlines will resume scheduled commercial flights on June 1 as the government reports a 90% containment of the outbreak. Only two cities—Colombo and Gampaha—remain on curfew lockdown. International cargo flights are still limited by destination.

THAILAND Major international airports report no operational issues despite the government-imposed curfew. Most businesses have extended Work from Home protocols until May 31, although some retail stores and restaurants have reopened with social distancing guidelines. Space demand to US West Coast is easing, and belly charters to Southeast Asia destinations experience improved rates as carriers continue to operate daily. Due to the sensitivity of perishable cargo and still-impacted supply chains, there is a concerted effort by the government to assist produce exports, including plans to arrange scheduled flights to five international destinations until June. Two new land border crossings to China have also been opened.

UNITED KINGDOM  The government assesses that it is currently paying wages for about 10 million furloughed workers due to the coronavirus outbreak and may find challenges in the coming months as it makes post-Brexit transitions. Some budget carriers plan to reopen passenger flight routes on June 15, but major airlines report job cuts numbering the thousands and substantially lowered earnings forecasts in the later quarters.

UNITED STATES Trucking safety restrictions have been relaxed by the Federal Motor Carriers Safety Administration (FMCSA) on May 14 after a 13-day protest by truckers were finally acknowledged by the government. The potential beef shortages attributed to a partial shutdown of domestic producers have been stymied by greater imports from Mexico and Brazil. Rising demand for passenger transport to Europe will be met as soon as this week as global airlines re-allocate routes. Port operations remain stable for the country, though several reports highlight year-over-year drops in cargo handling for major hubs. Air industry representatives, reeling from the sharp passenger loss, are also promoting social distancing guidelines and safety procedures to regain traveler confidence.

VIETNAM Local operations are back to normal but still pending for overseas cargo transactions. Air freighters and charters continue to operate as domestic passenger demand slowly returns. Sea ports in both Haiphong and Ho Chi Minh City are operating normally.

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