Shanghai Pudong airport continues to choke on cargo

Cargo terminals at Shanghai's Pudong International Airport remain extremely congested, but logistics companies responsible for getting shipments from their customers and on planes say the flood of freight trapped in warehouses is slowly beginning to recede.

"There are some green shoots of progress," Neel Jones Shah, global head of airfreight at tech-enabled forwarder Flexport, said in an interview. "Some backlogs have been worked through. We're getting a little bit of clearance in our own airport warehouses. We're able to ingest more freight, whereas before we held freight away from the airport."

The factors behind the choking levels of congestion remain the same: a tsunami of export orders for personal protective equipment and other medical supplies bound for countries combating the coronavirus outbreak; China Customs offices that are overwhelmed trying to manually inspect medical supplies after the government mandated checks for quality and fraud; and shortages of warehouse labor to process all the shipments.

One reason ground handlers face backlogs is that goods, particularly face masks, are mainly packed in loose cartons and building large shipments in pallets and containers is taking three to six times longer than usual, said Alan Zalas, a spokesman for Austrian-based cargo-partner GmbH. 

Before the crisis, cargo warehouses might have to load one or two containers for the hold of an international passenger plane also filled with baggage. Now, with many passenger planes operating as so-called "ghost" freighters they have to build as many as 14 containers, in addition to preparing shipments for pure freighters, said Andy Frommenwiler, vice president of airfreight for the U.S. subsidiary of German-headquarted Dachser.

He confirmed that shippers still need to deliver freight to the airport at least five days before the estimated time of departure to get on a flight.

Dachser USA has recently chartered several Boeing 777 freighters to transport goods from Shanghai to Los Angeles.

The situation is still so chaotic that ramp loading operations for giant Russian-built superfreighters – the Antonov AN-124-100 and Ilyushin IL-76 – have been moved out of Pudong to alternative airports, said Christos Spyrou, CEO and founder of Neutral Air Partner, a logistics cooperative based in Hong Kong.

Guangzhou and Zhengzhou airports are also experiencing congestion, he added.

Chicago-based SEKO Logistics says it believes congestion eased slightly this week because the stricter quality inspections and reports of empty freighters, missed flights and cancelled charter contracts led to a reduction in demand at Pudong.

Demand was further impacted by the increasingly strained political climate between China and the U.S., with President Donald Trump talking about seeking reparations for the coronavirus outbreak and fears of a further crack down on hospital-garment quality testing. 

The Wall Street Journal reported that shipments from Chinese automaker BYD, which has converted plants to make N95 respirator masks for customers such as the state of California, are being delayed by China's National Institute for Occupational Safety and Health for allegedly failing to meet manufacturing standards.

Many suppliers and buyers are more reluctant now to export medical gear to the U.S. for fear of failing customs or safety standards, SEKO said in a notice to clients. After reports that some hospitals received face masks made for other uses but labeled as medical grade, the U.S. Food and Drug Administration has created a "white list"approval system for medical goods manufacturing companies as a way to ensure protective gear meets safety standards.

Airfreight rates that were pushing close to $19 per kilo – quintuple the price several weeks ago – fell by 15 to 20% in recent days as freighter operators and forwarders, unable to fill aircraft began offering last-minute discounts to entice clients to load their cargo on planes that would otherwise not be filled, SEKO said.

The third-party logistics provider, which counts medical and pharmaceutical logistics among its specialty areas, warned that new airport handling procedures being implemented in China could complicate operations for shippers and forwarders. Airports have begun requiring airlines to meter inbound cargo by notifying customers when they can make deliveries. The earliest any shipment can reach the airport is 28 hours prior to flight departure.

If shipments require customs inspection, which takes a minimum of 12 hours, they will miss their flight and forwarders will not have enough time to replace the shipments with new cargo, increasing the likelihood of flights departing with empty pallet spaces, SEKO Logistics said.

Freight forwarders who spoke with FreightWaves said they expected congestion problems to become more manageable in a couple of weeks.

Flexport is still delaying freighter flights until all shipments are ready for loading so planes can depart on time, Jones Shah said. "Hopefully, this will be the last week we have to do that and we can operate on our planned schedule next week."