Airlines across Asia are refusing to accept bookings to and from Europe, throwing just-in-time supply chains into disarray and threatening to drive up air transport costs in the coming weeks.
A spokesman for Singapore Airlines Cargo said the company had cancelled all scheduled inbound and outbound freighter services to Europe and perishable and pharmaceutical products had been returned to customers.
“Until the situation improves, we are not taking in new bookings in general,” a spokesman told IFW.
"Singapore Airlines Cargo is planning to operate to alternative airports and the situation remains fluid.
“Customers are advised to refer to selling stations for updates and further flight developments for urgent shipments.”
Panalpina said some carriers in China had stopped accepting cargo due to unavailable warehouse space at airports and the grounding of flights.
As IFW went to press, all FedEx all flights from Asia to Europe were classified as “delayed” and a spokeswoman said no international express or airport-to-airport bookings were being accepted “until further notice”.
She added that money back guarantees would not apply to any shipments delayed because the closure of airspace was outside the remit of the company’s usual compensation system.
DHL said it was adjusting its air and ground networks to process shipments in the affected regions using available transport modes. “It [DHL] has increased its trucking capacity to minimize delays for shipments within Europe,” said a statement. “A 3-5 day delay is expected for shipments moving between Europe and the rest of the world.”
A regular buyer of DHL’s air freight services into the UK from Indonesia told IFW that the integrator was accepting air freight bookings at the usual rates, but without any time definitely delivery guarantees. “We were told that we would have to pay our normal rate for express but that it might be moved by sea,” she said.
At Bangkok International Suvarnabhumi Airport a source said that more cargo was being held for Europe than usual but most shippers were either holding cargo at their own facilities or looking at alternative options such as sea freight. “We hope the problem does not go beyond another 2-3 days as then there will start to be supply chain issues as inventories run out,” he said.
“Hopefully normal business will soon resume and we can have a busy few days replenishing the supply chain.”
Paul Tsui vice chairman of the Hong Kong Association of Freight forwarding and logistics (HAFFA), said that on Friday last week forwarders in Hong Kong were already holding over 4,000 tonnes of cargo in warehouses.
“That’s a lot higher now,” he told IFW earlier today.
“This is going to cause major disruption to supply chains around the world.
“Capacity from China to the US is also being affected because around-the-world charters which include a European leg have not made it back to Asia for eastbound uplift.
“Our members have not received any notification about rescheduling of cancelled or delayed flights.
“People are looking for charters, but nobody can do anything until the volcano situation improves. Even if you have a slot you can’t fly.
“Even when it does clear it will take time to uplift the backlog.”
Shippers are now bracing themselves for higher air freight costs into Europe in the coming weeks as the ramifications of the prolonged closure of many European airports on air freight capacity supply and demand become clearer.
Sunny Ho, director of the Hong Kong Shippers’ Council, said that shippers routing cargo through terminals in Hong Kong and southern China had already been anticipating capacity shortages in the run-up to Labour Day on May 1.
“We usually see congestion at that time, so the stoppage of all these flights will make this all the more difficult to cope with,” he told IFW. “Some are switching to sea-air or sea, but for those which have to use air, even if air space is opened up early this week, costs are going to rise.”
A spokeswoman from the Singapore branch of air charter specialist Chapman Freeborn said enquiries for charters had increased but finding additional capacity was difficult in an already tight market.
“We’ve been looking at lots of options for customers, but there was already a shortage of supply and finding alternative solutions into Europe when the weather keeps changing is hard,” she said. “There’s a big backlog of cargo in Asia and charter rates are rising.”
Panalpina said that the cancellation of flights would further tighten capacity and lead to additional bottlenecks as backlogs built up around the world. A statement issued to customers said the situation was particularly serious on Far East westbound trades.
“As soon as flight operations are back to normal, additional capacity at higher cost will be required to clear the backlog,” said the company.
“Consequently airlines are implementing a rate increase with immediate effect and until further notice. Although Panalpina is working on optimizing procurement in the customers’ interest, the present situation leaves no alternative but to pass on this rate increase.”
Kuhne + Nagel said the ‘Force Majeure’ volcanic clouds could push up freight costs in a market already short of capacity. “With discontinued air cargo uplift, warehouses in Europe and overseas will run full resulting in cargo embargoes until the air traffic restarts,” said a statement.
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