China's regulations, freight and logistics
Regulations and customs processes
There is no change to the regulatory settings for trade between New Zealand and the Peoples Republic of China.
No additional sanitary or phytosanitary requirements are required by the government on market access for primary sector products exports and imports due to novel coronavirus. MPI has received confirmation from food safety, customs, and animal and plant quarantine officials stating that there are no changes to their customs and import clearance procedures.
At the same time, China Customs has announced 10 measures to support foreign exporters to get back to normal business operations quicker. These include simplifying registration and filing procedures and speeding up the time taken for inspection of imported raw materials and equipment needed in China. Streamlined procedures for importing food and agricultural products were included in the package. More information can be found here (Chinese language).
A leading New Zealand freight forwarder has advised there are no quarantine requirements on imports from China to New Zealand.
Freight and logistics
Air and seaports are open, but there are operational delays affecting imports in and exports out of China, due to ongoing staff shortages. Many ports, including Shanghai, Nanjing and Qingdao, are prioritising the clearance of medical equipment and essential food (such as rice, flour, cooking oil, meat, eggs, milk, vegetables and convenience food).
Refrigerated (reefer) container movements have been severely disrupted due to a shortage of truck drivers, as well as highway closures in some parts of the country. This in turn has led to a shortage of power plugs in ports and low availability of cold storage facilities. There is noticeable congestion at Shanghais port, where refrigerated containers awaiting pickup are being temporarily stored and plugged on board a vessel docked alongside. Reefer containers in transit may be re-routed for transhipment or returned to their port of origin.
These rising costs have led many shipping companies to introduce a congestion charge for reefer transport to China, with prices that fluctuate between US$1,000 and US$1,250 dollars per reefer container.
Trucking in China in general is severely disrupted due to driver shortages and restrictions on vehicle movement. Due to strict controls imposed in various provinces, many truck drivers are unable to return to work in time. Drivers returning from other cities are required to isolate for 14 days before resuming work. Where transport is available, the cost has increased up to 150% due to the shortage of drivers and growing demand.
There is significant disruption to air freight as a result of the reductions and cancellations in flights to and from China. Airlines still servicing the Chinese mainland have announced that express rates (increased or premium) may apply, as demand is expected to increase and capacity has significantly diminished.
Advice to exporters
Proactive and daily communication with your logistic and insurance providers is essential as the situation is changing quickly.
Consider reducing shipping volumes, and stock held in China, until logistics operations resume to normal. Although products may be able to clear customs, road transport out of the port and around China may be significantly disrupted.
Exporters should maintain close contact with their preferred freight forwarders and shipping lines, who will be providing regular updates. There are as number of major shipping, road and air freight companies providing excellent snapshots and updates on the current logistics situation around the world. Please visit them below.
Kuehne + Nagel: Logistics company Kuehne + Nagel is updating the status of sea, air and road logistics across Europe, China, wider Asia, North America, the Middle East and Africa, South Central America and China.
Levels of economic activity in China vary from province to province, as provincial-level governments balance the maintenance of public health with restarting production and manufacturing activity.
Guangdong province has provided stringent guidelines on how companies can return to work. This includes checking the travel and possible exposure history of workers, and stringent rules implementing additional hygiene measures.
Beijing and Shanghai also have additional hygiene measures, inspections, and limits on the number of people that can gather in one place. As large numbers of workers return to work, close monitoring is taking place to ensure additional measures are being implemented and adhered to.
Where factory restarts have been announced, production activity is still unclear. Transportation challenges for migrant workers and ongoing public concern about the virus are slowing down the restart.
Advice to exporters
In the short term, business continuity remains the priority. Companies should continue to maintain close communication with supply chain and logistics partners to understand the specific situation within their businesses.
The situation has highlighted the importance of risk management and supply chain diversification. There is value in clearly identifying and considering the feasibility of sourcing from other suppliers to help mitigate risk of overreliance on a single source for vital components.