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Coronavirus Update

May 2020

 

On 12th March 2020, the World Health Organization (WHO) categorised the coronavirus outbreak that originated in Wuhan, China as a pandemic.  This was followed with a call for all countries to take “urgent and aggressive action” to change the course of the pandemic.

Over two months on, the fortunes of nations around the globe vary greatly.  Australia and New Zealand have managed to avoid the disastrous consequences witnessed in much of Europe and the United States of America.  As both Australia and New Zealand start to wind back the restrictions placed on the movement of their residents, there is currently no end in sight for many elsewhere. 

Following is a snapshot of the current affairs both locally and internationally.

 

Australian Impact

Updated 25.05.2020

Australia’s reported cases sits at 7,118 as at 25th May with 102 reported fatalities from the virus. This equates to 240 new cases in a little over two weeks, a very positive sign for the Government and entire population.  States are beginning to relax restrictions with schools and some services returning this week in all states.  Victoria will be the last state to have all students return to school, week commencing 8th June. The Federal Government is keen to see a return to business as soon as possible and is urging the states to implement plans to make it happen.  How this will be managed is being left to the states to coordinate, however it is expected that many employers and employees will handle the return very slowly, with some expecting a “new normal” in the way that business is run.  Some states have already begun with restaurants and cafes reopening, although larger gatherings are still some way off, as is unrestricted movement across state borders.

The delivery of all Australian Government services has been classified as essential services by the Federal Government.  All biosecurity and imported food inspection operations will continue to be delivered, including treatments offered by third parties that are, by extension, considered essential services.  The Department of Agriculture, Water and the Environment is currently working on business continuity plans for their various operations in a bid to minimise impacts and reallocate resources where volumes have increased or decreased as a direct result of the pandemic.  Further information will follow as it becomes available.

On 30th March 2020, the Customs (Prohibited Exports) Regulations 1958 were temporarily amended to prohibit the non-commercial export of certain medical goods from Australia.  These items include disposable face masks, gloves and gowns as well as protective eyewear and alcohol wipes and hand sanitiser.  

Australian importing associations have been in discussions with ATO and Treasury in an attempt to have the Government allow deferral of duty and GST for all importers.  The logic was that many importers will be feeling the pinch due to lack of sales which will result in cashflow issues.  With the Government’s commitment to trying to ensure businesses retain their staff this seems a logical step, and one taken by several other countries globally.  Australian Border Force recently announced that it will not make any blanket provisions for the deferral of duties, but it will consider extending payment plans to businesses on a case by case basis where applicable.

The ATO does already operate a deferred GST scheme which is available to all importers that meet with the set requirements, namely monthly online lodgement of their Business Activity Statement and no outstanding debts.  ATO is currently fast-tracking these applications so any importers feeling uneasy regarding their cashflow may wish to investigate this scheme.

The Australian Government announced on 30th April 2020, the implementation of a new temporary Bylaw to allow the importation of certain goods for use in the diagnosis, treatment or prevention of spread of coronavirus.  The Bylaw is in force from 1st February 2020 until 31 July 2020, with refund provisions available, and allows items such as face masks; gloves; gowns and clothes; goggles, glasses, eye visors and face shields; disinfectants (excluding hand sanitisers); soaps; Covid 19 test kits and reagents; and viral transport media, to be imported free from duty.

Some states have started to relax restrictions due the reduction in reported new cases.  This could see a slow return to normality for businesses to resume and people to return to work, thereby stimulating the economy.

The reduction of import volumes is expected to continue for another two to three months at least, as production and export of goods from major trading partners in Europe and North America continues to stagnate.

The Australian Government has released its COVIDSafe App, which tracks movement of persons and allows traceability of those movements in the event somebody later contracts the virus.  Residents are urged to download the app as a large uptake should result in the lifting of some restrictions across the country.  Current figures indicate over six million downloads of the app, still a long way short of the Federal Government’s 40% target.

 

Global Impact

Updated 25.05.2020

The number of cases outside of China continues to rise rapidly, with the United States hardest hit.  Spain, Italy, France, Germany, United Kingdom, Brazil, Turkey, Russia and Iran have all also surpassed China in terms of number of reported cases.  213 countries and territories have confirmed cases of coronavirus, with over 5,500,000 diagnoses (approximately 50% active) and 346,949 deaths recorded as at 25th May 2020.  The United States is expected to surpass 100,000 fatalities in the coming days.

Following is information collated for various countries, however importers and exporters are advised to check with your clients, suppliers and freight forwarders for further country specific information.

Governments around the world had all imposed similar restrictions to those witnessed in Australia.  Some countries went further and implemented full lockdown restrictions.  These respective Governments are introducing large financial packages designed to minimise disruptions and job loss while assisting those that are stood down with rapid access to benefits. 

European nations are easing their lockdown restrictions, in some cases to significant discontent from their residents.  Many cafes and restaurants are open for business, albeit with observance of social distancing guidelines, and many shops and other businesses are reopening with limits on the number of patrons allowed at any one time.  The United Kingdom is also pushing ahead with a lifting of restrictions, including reopening of schools, despite the fact the virus transmission does not appear to be under control.

The United Kingdom has surpassed the death toll of Spain and Italy, with the figure standing at 36,793 as at 25th May. 

Thoughts also begin to turn back to Brexit.  Following on the heels of Covid-19 there are concerns that many businesses on the verge of collapse could face closure without clarity regarding the deal.  With the economy shrinking (reports estimate a 14% contraction for 2020), a hard exit and the associated tariff increases and paperwork confusion could prove too much for many companies.

Germany has started to ease restrictions, with many shops and public spaces starting to reopen to the public.  This has seen an increase in infection rates, a stark contrast to the minimal transmission rates while the country was under lockdown. 

The EC has unveiled a new guide for member states to implement “green lanes” for freight at EU borders.  This is an effort to avert lengthy queues and allow critical goods to move more freely, particularly from eastern Europe.  Queues on the Polish / German border were at points stretching to 50 kilometres.  The new measures are hoped to reduce border processing times to fifteen minutes. 

Reports from the United States estimate over 36 million jobs have been lost resulting from the outbreak, as at 25th May 2020.  President Trump has suspended entry to passengers that have been in Brazil within 14 days prior to seeking admittance.  Memorial Day weekend has seen thousands ignore the social distancing guidelines issued by the Government, something likely to see a delay to significant easing of restrictions.  

India has today, 25th May, resumed domestic air travel with the advice that passengers self-monitor their health for 14 days.

New Zealand is lifting their restrictions even further with the news that from Friday 29th May the 10 person limit for gatherings will be increased to 100 people.  Residents are urged to remain vigilant and continue the good work that has seen only one new case reported in the last 8 days.

Dubai has been gradually opening malls, shops and restaurants over the last two weeks.

Colombia has extended its initial quarantine period to now end on 11th May 2020.

South Africa began relaxing restrictions from 1st May.  Further easing of restrictions has taken place however parts of the country with the highest rates of infection remain on level 4 restrictions.

Kuwait has imposed a full curfew until 30th May 2020 to stem the spread of coronavirus.

A global shortage of Personal Protective Equipment (PPE) is being exacerbated by Governments impounding exports of goods for their own needs.  The United States has been accused by the German Government of “modern piracy” as many legitimate shipments of PPE are not reaching their intended destination.  As Governments and states compete for PPE, so too are many retailers and warehouse operators, as they look to provide equipment for their staff.  Add to this the fact that many Governments are seizing sub-standard medical supplies before they make it to market and it appears that the shortage will not be filled anytime soon.

Freight Forwarders globally are being asked to be vigilant as criminals attempt to exploit the Covid-19 situation by pushing fake medicines and PPE into supply chains.  These items pose a significant risk to individuals as they offer little to no protection against the virus and are likely to cost lives.  In Australia, businesses can provide anonymous tips to the Australian Border Force through their Border Watch program.

 

Impact in China

Updated 25.05.2020

China continues to test non-symptom patients in an effort to control community transmission that led to a brief second wave of cases.  Reported cases sit at 82,985 as at 25th May with 4,634 reported fatalities.

Most new cases being diagnosed in China are ‘imported’ cases and there has been a small spike in the past two weeks.  Most large cities have kept entertainment facilities closed in a bid to avoid a second wave of diagnoses.

The city of Shulan in NE China was locked down from 10th May resulting from a small cluster of new cases.  There are reportedly 108 cases being treated in 12 Chinese cities.

China Customs Notice No.53 of 10th April 2020 has confirmed that eleven medical related items will now be inspected to ensure the quality of exported goods.  This appears to be in response to claims globally of inferior product being exported as brand name goods.  These shipments can expect delays.  The goods in question are PPE, thermometers, ventilators, hair nets, protective glasses and goggles, medical gloves, shoe covers, patient monitoring devices, medical wadding and gauze and disinfectants.

 

Air Cargo

Updated 25.05.2020

As lockdowns begin to lift there will be a clamour for collection of export cargoes.  Our partners overseas will be co-ordinating with suppliers to schedule collection and routing to move the goods as required.  Delays should be expected at this time.

Airlines have suffered significant stress during the periods of lockdown. Many airlines are beginning to ramp up their cargo schedules in a bid to generate enough cash-flow to sustain operations.  Many US airlines received a reprieve due to the bailout bill passed into law, however Colombia’s national carrier, Avianca, has declared bankruptcy.  

The German Government has reached an agreement with Lufthansa over a EUR9bn bailout package.  In exchange, the Government will take a 20% stake in the airline.

The rapid spread of the virus to new locations has seen a reduction in flying demand.  Qantas has confirmed that they are attempting to maintain their usual connectivity however will do so with smaller aircraft.  This will extend until mid-September 2020 and will see a smaller freight capacity on many routes.  The Brisbane to Chicago route that was due to open on 20th April has now been delayed until September.  Strengthened demand for the direct Perth-London route will see a temporary re-routing to Sydney-Perth-London with effect from 20th April.

Virgin Australia entered into voluntary administration on 21st April.  At this stage hope remains that a buyer can be found to keep the competition with Qantas on Australian domestic lanes.  This receivership has significantly reduced airfreight capacity between Australian cities.

IATA has published an initial assessment regarding the impact of coronavirus, with an anticipated 13% full-year loss of passenger demand for carriers in Asia-Pacific.  Offset against the previously expected growth, this would result in an approximate 8% reduction against 2019 levels.  To put that into monetary terms, this translates to roughly a USD 28 billion revenue loss.  It remains to be seen whether carriers will increase cargo rates with the anticipated increased demand in an effort to offset some of these losses.

The grounding of a significant part of the World’s passenger fleet has seen a huge loss of cargo capacity globally which has in turn driven up the cost of air freight.  Some airlines are adapting passenger aircraft to add the cargo capacity but the high demand for movement of medical supplies and perishables leaves little space for other goods.  TAC Index indicates that air freight rates from Shanghai to European destinations have more than doubled in the past week.

If you have any urgent cargo to move from China via air cargo please discuss this with your Account Manager.

 

Sea Cargo

Updated 25.05.2020

As lockdowns begin to lift there will be a clamour for collection of export cargoes and empty equipment.  Our partners overseas will be co-ordinating with suppliers and shipping lines to schedule collection and routing to move the goods as required.  Delays should be anticipated at this time.

Vessels sailing from China to Australia after 1st February 2020 will not be allowed to enter port within a 14-day window of last being in China. This means for voyages taking 12 days, the vessel will have to anchor offshore for 2 days before being permitted to berth.  Pilots are permitted to join vessels before the 14 days have elapsed but are advised to wear personal protective equipment (gloves and mask.  If any single member of crew joins the vessel in China, the entire crew must serve the 14-day quarantine period.  

Maritime Safety Queensland (MSQ) announced that the numbers of new cases, as reported by WHO, occurring in all countries within 14 days voyage from Australia is sufficiently low that the exceptional circumstances no longer exist that prohibited vessels docking at Queensland ports.  This brings the ports of Brisbane and Townsville into line with the ABF guidelines.

Due to the unpredictability of the virus and the fluidity of each Government’s response, the Australia Peak Shippers Association (APSA) has agreed to waive the need for 30 days’ notice to be provided to shippers informing them of blank sailings.  Dozens of blank sailings have occurred globally while further blank sailings remain a possibility and will be updated here as news is made available.

Maersk Line has announced a change in port rotation for vessels calling into Australia on its Dragon service in order to improve schedule reliability.  This measure is taken in view of the 14-day period vessels are required wait prior to berthing in Australia.  Effective from vessel Brevik Bridge v.011S, ETD Yokohama 10th March, the Brisbane southbound call will be omitted, adding 12 days for any freight destined for Brisbane.  The revised rotation is Yokohama – Osaka – Busan – Qingdao – Shanghai – Ningbo – Sydney – Melbourne – Brisbane – Yokohama.

The record low oil prices along with the decrease in volume on the Asia-Europe routes has seen some carriers change the routing and avoid the Suez Canal to increase profits.  The re-routing around the Cape of Good Hope will see transit times increase for this trade lane. 

Reports have confirmed that there were 212 blank sailings up to 6th April this year, with some experts tipping losses to the shipping industry of approximately USD 23 billion.  The expectation is that there will be more blank sailings as demand from Europe and the United States decreases which could place some carriers under extreme stress, last witnessed in 2016 when Hanjin Shipping was declared bankrupt.

 

Export Cargo

Updated 25.05.2020

Maersk Line has confirmed a further blank sailing on their Komodo Service.  Al Hilal v.020N will depart Brisbane on 24th May, a week later than originally scheduled, effectively cancelling the week 20 service.  

The change in supply and demand of shipping services has seen some shipping lines implement a Peak Season Surcharge for cargo moving from Australia to most regions (except USA and Europe).

The Australian Government announced on 30th March that the Customs (Prohibited Exports) Regulations 1958 were temporarily amended to prohibit the non-commercial export of personal protective equipment and hand sanitiser.  These items are in short supply in Australia and required for the health and safety of Australian medical personnel and residents, so the export of such items is not in the national interest.  Authorities will be given greater powers to seize items at the border with increased penalties applicable to individuals and groups profiteering from the COVID-19 outbreak.  

 

Travel Restrictions

Updated 25.05.2020

Effective from 25th March Australian permanent residents are restricted from travelling overseas unless they meet certain exemptions.  Travellers meeting the exemptions can apply online to the commissioner of the ABF for permission.  Further information can be found here.

Australia has extended its cruise ship ban for a further three months, until at least 17th September 2020. 

The Australian Government has imposed travel restrictions on all passengers arriving from overseas.  Effective from 16th March, all passengers travelling or returning to Australia will be required to self-isolate for 14 days, including Australian citizens.

New questions have been added to the Traveller with Illness Checklist (TIC) for biosecurity officers to administer and attempt to identify passengers arriving that have been exposed to Coronavirus.

 

Clearance Issues

Updated 07.05.2020

Concerns remain relating to delays in clearance at ports and airports due to lack of commercial and regulatory paperwork from suppliers and Government departments alike.

Industry associations raised concerns with Department of Agriculture (DoA) regarding possible delays for consignments that cannot be released from Biosecurity control due to minor documentary amendments being required and not able to be obtained from the Chinese Authorities.  Advice received from DoA is that as the issues and delays are only anticipated at this stage, the Department will not be revising any of its documentary policies to accommodate.  If consignments are received that will be held pending documentation, movement of goods to an appropriate class of Approved Arrangement site should be requested.

ABF has made some allowances regarding unsigned MAFTA CoOs.  Some certificates are being issued without a stamp and signature, which will be accepted on the condition that we are able to provide ABF with a dump of the MITI system screen showing that the certificate was approved by MITI.  The dating of the CoO must also be within the period of the Malaysian Government Movement Control Order (18th March – 14th April).  This only covers MAFTA certificates and not AANZFTA certificates.

If you have any shipments en-route to Australia and are missing documentation, please contact your Key Account Manager to discuss options.

  

Department of Health

Updated 06.02.2020

fact sheet has been issued by Department of Health for border workers with concerns about handling and destuffing imported goods from Hubei province.  The fact sheet confirms items such as symptoms of the virus and how to minimise risk of exposure or contracting the virus.  This fact sheet has important information for the wider community as well and is worthwhile reading.

Further information can also be found at the Department of Health’s website www.health.gov.au.

 

Henning Harders Business Continuity Plan

Updated 07.05.2020

Henning Harders has successfully implemented its “Work from Home” contingency arrangements.  Supported by our advanced operating system development, this was managed in stages to ensure a seamless transition with no business interruption. 

By carefully managing the relocation of resources in stages throughout the last week, we are now positioned to ensure both the safety and wellbeing of our staff as well as the continued operations and service our business partners and clients have grown accustomed to.

Our employee email signatures have been updated with direct line details to allow for ease of contact.

 

As the news of the outbreak is ever-changing, Australia’s response remains fluid.  Henning Harders will continue to update stakeholders as news develops.

Please contact your Key Account Manager or Harders Advisory for further information.