Customer Advisory COVID-19

Since the COVID-19 virus has spread, we have extended our COVID-19 customer update. We have compiled and aggregated facts and figures across all business areas as well as covering all regions. Please continue to be engaged with your account managers on your latest plans, prices and projections. We continue to make every effort to support your business.


Global Market Updates

  • Global

(Nov 10, 2020) -?Market demand of global air freight trade is continuously outperforming the capacity supply. This is currently leading to further capacity challenges in the global air freight market as the total number of passenger flights remains very low. Passenger flights in the international long-haul market are far below pre-COVID-19 and not expected to recover in the short-term. This is mainly caused by an on-going impact of COVID-19 (e.g. local quarantine measures, increasing COVID-19 cases among many key large economies, uncertain passenger demand outlook and inventory development / forecasts).

Asia Pacific is currently leading the market related to a strong demand situation also considering pre-festival season product launches during the fourth quarter of 2020. However, it is also very critical to review the situation across countries like Japan and South Korea as they developed to play a major role in the currently supply of healthcare equipment during the pandemic. These markets have been capable to cope with the demand so far due to additional freighter flights and services to support the worldwide supply of critical required medical equipment.

Throughout this peak season we see additional demand in the market for freighter flights and operations which DB Schenker countered with increasing flights in our Global Flight Operations to overcome the current challenging capacity situation. The flight operations program has been extended recently with additional flights from China to Europe and North America as well as regional solutions in Asia Pacific due to the large dependency on passenger flights.

The situation in China at the airport terminals has become slightly worse considering the large spike in volumes and COVID-19 measures. Therefore, the lead time for air freight is expected to increase due to extended handling times at the airport warehouse operations.

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Spotlight: COVID-19 Vaccine Logistics

One of the key leading pharmaceutical manufacturers has announced this week a significant progress related to their medical product supporting the fight against COVID-19 pandemic. The air cargo market is further preparing to support the global supply of a possible COVID-19 vaccine. The industry will be required to support a global distribution through approx. 900 flights of 747-freighter aircrafts to reach a global coverage. This additional demand is already foreseen to require airlines shift flights and capacity from certain trade to the markets with the major demand in a first wave of a vaccine.

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Our console charter flight schedule now includes the following flight operations:

→?Europe – China – Europe: 4?flights per week (B747-400F)
→?Hongkong – Europe: 2?flights per week (B747-400F)
→?China – USA: 3 flights per week (B747-400F)
→?Europe – USA – Europe: 3 flights per week (MD11F and B747-400F)
→?USA – Australia: 1 flight per week (B777F)
→?Europe – India – Europe: 1 flight per week (B747-400F)

  • Europe?

(Nov 10, 2020) - All offices remain in full operation with access to terminal handling and ground transportation. All our European hubs deliver import and receive export freight with no backlogs recorded towards the weekend. Operationally, our linehauls to and from the hubs are running as scheduled. In some areas, our cross-border trucks might experience some minor delays.

  • Asia Pacific?

(Nov 10, 2020) - Shanghai Pudong Airport Terminals are experiencing some congestion and minor delays clearing backlog, due to a temporary suspension of operations on Nov 9. This situation was because of a preliminary positive COVID-19 test of 1 person, that triggered the Airport BCP and testing 2,800 people working at the terminals.

The situation was contained with no other positive infection results reported, and operations are returning to normal. The incident underscores the continued risk on operations and the vigilance necessary to cope with the ever-present COVID-19 situation.

Similarly, some delays are also seen in KUL as mandatory testing is in effect for all personnel due to some terminal staff testing positive a few days earlier.

Though resurging COVID-19 infections are evident and tight controls remain in some countries across APAC, our air freight operations remain stable and available to support customer needs. Some delays could be expected in customs clearance and transportation. Alternatives to move / transport cargo via other gateways / routes are established. Customers may contact the respective DB Schenker representatives for support or solutions if required.

Capacity is expected to remain volatile. We remain vigilant in monitoring the situation, to mitigate events with potential impact to operations.

  • Middle East/Africa?

(Nov 10, 2020) - Overall, the air freight operations in the countries remain uninterrupted even as Oman, Kenya, and South Africa slip into partial curfew. We continue to serve our customers. Our regional and global preferred carriers are seen to gradually increase the frequency of passenger cargo flights.

Situation

Country

No operational restrictions for air cargo business

Qatar, Kenya, Oman, South Africa, Bahrain, Saudi Arabia, UAE, Egypt

Restrictions for operational air cargo business

-?

  • Americas?

(Nov 10, 2020) - The 4th quarter and a busy peak-season have placed a strain on capacity to varying degrees by trade-lane. In addition, airport terminals are at times running behind in transitioning cargo creating further challenges. DB Schenker Flight operations and part charters both transatlantic and transpacific are providing secure capacity for our customers, and our airport-based offices are providing the necessary coordination to provide the fastest release of cargo possible. Situation by trade-lane is as follows:

USA – Europe

→ Market demand is moderate to strong. Further charter flights have been launched with the Global Flight Operations Program to provide additional air cargo capacity to Europe. These flights are connecting Atlanta and Chicago with Frankfurt, Germany and other surrounding Central European markets. They offer DB Schenker customers a stable access to capacity in what continues to be a volatile market situation.

USA –?Asia (excluding China)

→ Capacity has tightened on most trade-lanes as a 4th quarter peak has materialized with the strongest capacity challenges remaining with movements to Australia, Singapore and India. DB Schenker’s strong ‘Part Charter’ capacity in place from ORD to destinations in Australia, and flight operations via the DB Schenker Euro Hub from FRA – BOM are supporting DB Schenker customer demands to these destinations.

USA (exports to) – China

→ No capacity constraints to key destinations in China. Demand is moderate with the market supported by the large amount of inbound flight operations and charters that support capacity on the return leg to China.

USA – Latin Am?/ Latin Am to?Europe and APAC

→ Intra-Americas: Market demand has grown significantly into the 4th quarter, with access to capacity becoming very tight with pricing moving up on all lane segments. Demand USA to Brazil and Chile having become much stronger, and critical situations remaining for movement to Peru and Bolivia from the USA, and between Brazil and Mexico. Perishable peak season as well straining available capacity and increasing rates ex Latin America to USA, Europe and Asiatic destinations.

USA – Middle East / Africa

→ South Africa with continued strong demand and shortage of capacity.

  • Global

(Nov 10, 2020) - Equipment availability remains very tight all over Asia with critical stock inventory in CN, VN, TH, but also India, Korea as well as Chinese inland places. Carriers push for utmost empty positioning activities ex Europe and North America back to Asia. At the same time, rates in all main trades remain high and keep on further increasing, especially from Asian Origins. Carriers apply very strict yield management and prioritize equipment release and space accordingly.

Capacity ex Asia runs at fullest utilization, in addition to the extra loader programs continue. Market is expected to produce full ships until Chinese New Year in January 2021. Given this positive momentum, industry analysts have revised their earlier more negative anticipation of the ocean freight to a more moderate negative 6% volume growth for 2020, with an outlook of a growth in 2021.

The current circumstances make it very important for our customers to plan volume forecast (we advise 4 to 8 weeks in advance) and be flexible to re-route cargo (for congested destinations).

The situation for exports ex Europe is more calm, however volumes on the exports are improving and vessel utilizations increase. Rates remain stable with a trend upwards.

Only export-volumes ex Europe to South America remain slightly depressed.

Please expect the situation on all trades subject to continuous changes.

With an uncertain outlook on vessel utilizations and partly huge impacts on port terminals, we need to prepare for changing schedules and transit times (due to slow steaming, port omissions or additional port inclusions as a result of service mergers), sudden / unexpected delays in uplift, increased bottlenecks of equipment availability, inconsistent departures and sudden surcharges possibly resulting in higher costs for the supply chain.

Our experts in Ocean will support and guide for:

→?DB SchenkerOcean priority product on all main trades which guarantees loading within a fixed window.
→ Various DB SchenkerOcean delay in transit options (a. stopping of cargo in a t / s port, b. using own or contracted warehouses and store goods accordingly), this reduces actual cost in the ports (costly storage) and helps ports to prevent from being congested and thus ensures moves at quay without waiting time for truckers.
→ DB SchenkerOcean offer for “slow boat – fast boat” possibilities if delay in transit is not an option (e.g. with sailings around Cape of Good Hope).
→?DB SchenkerOcean offers for alternate routing possibilities to ensure cargo is lifted from port of loading.
→?Volume forecast and allocation planning: We have access to volumes on all alliances and support volumes planning through consultation services (allocation match based on customer forecast). Under progress: volume prediction per vertical.

→ Contact your DB Schenker Account Manager regarding Personal Protective Equipment services ex China Europe.

  • Europe?

(Nov 10, 2020) - On trades to the West, the utilization to North America has improved to over 90%, however LATAM destinations are in decline. It is expected that carriers will take additional actions on curtailing the capacity.

On exports ex Europe to the East, carriers still report strong booking situations with only limited shortfalls. Especially commodity volumes are still going strong (logs, chemicals). Equipment availability becomes a larger concern due to an upcoming 25 - 40% reduction of inbound flows plus expected longer usage of the equipment.

All European Ocean Freight Branches are fully functioning operationally.

  • Asia Pacific?

(Nov 10, 2020) - There are no significant updates operationally, status remains unchanged.

Though resurging COVID-19 infections are evident in some countries across APAC, our Ocean operations remain stable and available to support customer needs. Delays could be expected in customs clearance and transportation.

→ Alternatives to move / transport cargo via other gateways / routes are established. Customers may contact the respective DB Schenker representatives for support or solutions should it be required.

  • Middle East/Africa?

(Nov 10, 2020) - DB Schenker is able to manage the current demand from customers even though an equipment shortage has been seen in the region.

→ Please get in touch with your DB Schenker Account Manager for the latest rates.

  • Americas?

(Oct 13, 2020) - On the exports ex NORAM it is worthwhile to mention that especially to Asia, the vessel utilization remains strong with no inflation of market rates expected. Void sailings and service suspensions causing severe shortage of space on all North American gateways resulting in high vessel utilization factors across the board. Roll-overs and yield management are being applied by carriers. Extra loaders deployed and services being reinstated on ad-hoc basis. Asia to North America is peaking further and bookings Asia to South America have come up massively during the past two weeks. We continue to monitor the situation.

  • Global

(Nov 10, 2020) - Europe Land is fully operational and available for business, managing existing constraints re-established during wave 2. Asia gives a heterogeneous picture with most countries fully operational and available for business while a few countries (such as India) are facing challenges, however operating. Asia Land bridge (China – South East Asia) as well as Eurasia Land bridge (China – Europe Train) are fully operating, although facing congestions. Land operations in the Americas are also showing constraints, but still working close to normal.

  • Europe?

(Nov 10, 2020) - Restrictions to contain the COVID-19 pandemic are re-established in several European countries and in parts directly or indirectly affect the transportation of goods. For any potential cases of disruptive conditions, we follow our pre-defined contingency plans to ensure flows of cargo as much as possible. In addition, we are adapting our transport service offerings daily to the needs of our customers.

Some receivers continue to have limited operations and we ask all shippers to check the delivery possibility with the consignee to avoid cost for storage or return shipments.

Are you up- or down-scaling your business activity in response to the changing market environment? DB Schenker Landtransport is your partner with one of the strongest and most resilient networks across 40 countries in Europe. Moreover, with our digital channels like connect4Land we offer a 24/7 entry point to our transport services, easy to use from everywhere, every time – Click. Ship. Done.

  • Asia Pacific?

(Nov 10, 2020) - There is no change in operational status nor updates since the previous advisory.

Our Domestic Land product continues unabated to provide our regular high level of service.

Our Asia Landbridge FTL / LTL road service still encounters intermittent reactionary border closures. However, all crossings are officially operational now the Thailand / Myanmar border has reopened. Border congestion due to high demand can add between 1 and 3 days to long distance trucking. DB Schenker staff at our border offices ensure lead-times are minimized through “triage” prioritization.

Additional labor and associated domicile costs are still required to strategically avoid lengthy quarantine periods for our international drivers.

Congestion levels continue to fluctuate on our Eurasia service for Rail and Road. We therefore recommend checking estimated lead-times with your Account Manager. Due to our dominance on this lane, DB Schenker are best positioned to provide optimum transit times to our customers.

Our Domestic and International road and rail services continue to meet the high demand and are strategically positioned to meet the forecast demand spike associated with ongoing reduced Ocean freight and Airfreight capacity.

→ Eurasia Land bridge

  • Middle East/Africa?

(Nov 10, 2020) - International GCC land border connecting Saudi Arabia to other countries has been opened for land transportation / land freight movement with limited operations.

  • Americas

(Oct 27, 2020)??-

→ ?USA: USA still experiencing tight capacity on West Coast, South Texas and in the Midwest. Anticipate capacity to be tight throughout the remainder of the year, as we continue into the peak season. Port volumes in Newark and Long Beach continue to keep drayage capacity very tight.
→ ?Brazil: Market is running in normal conditions.
→ ?Mexico: 100% fully operational.
→ ?Canada: No issues on capacity.

  • Global

(Nov 10, 2020) - Our operations and customer services remain stable. No change in prioritizing protection?of our staff and keeping our customers’ businesses?running. With dedicated guidelines and preventive measures, we?keep up our constant and short-term customer support.

→ In case you need temporary space, reach out to your DB Schenker Account-Manager or local contact person!

  • Europe?

(Nov 10, 2020) - All sites in our operations in Europe currently remain fully operational with precautionary measures in place for the health of workers.

  • Asia Pacific?

(Nov 10, 2020) - There is no significant change in status for APAC countries generally from previous updates. Tight controls remain in several APAC countries. We remain vigilant in monitoring the situation, to mitigate events with potential impact to operations.

Due to extension of movement restrictions, some delays may be expected, albeit with no significant impact to our operational status.

→ ?For India, there have been no significant operational updates. Please refer to our India website?for detailed information via download.
→ ?For Greater China, no change in operational status.
→ ?Malaysia’s RMCO restrictions are extended until Dec?31.

While governmental imposed restrictions in APAC countries continue at varying levels, our service levels so far are maintained with our CL operations available to support customer needs.

Delays may be expected due to availability of workforce and enhanced strictly enforced hygiene and monitoring SOPs. Customers may contact the respective DB Schenker representatives for further support if necessary.

  • Middle East/Africa?

(Nov 10, 2020) - All DB Schenker contract logistics facilities in MEA continue to operate with appropriate health and safety standards, even as Kenya and South Africa slip into partial curfew.

  • Americas?

(Nov 10, 2020) - While observing increasing cases of COVID-19 infections across the region, our warehouses continue to operate, with precautionary measures in place for the health of our people and hence keeping up our customer services.

→ ?USA: All operations in the USA remain operational with precautionary measures in place for the health of our people and delivery of services to our clients. We are seeing increasing cases of COVID-19 in the USA and remain very robust in our safety measures and protocols.
→ ?Mexico: COVID-19 numbers are increasing in Mexico. Some states do require partial shut downs of private life and economy in particular on weekends. We are doing everything possible to minimize the impact to our personnel and facilities.

DB Schenker Organizational Update

DB Schenker is closely monitoring the COVID-19 situation. With precautionary measures in place, we are aiming to maintain full operability across all DB Schenker operations. In our offices across all continents, we have taken action to enable as many employees as possible to work from home to support the social distancing guidelines put in place by public authorities.

The next customer advisory will be the November 24?release or earlier should there be significant developments. Visit our website in advance to be among the first informed.

The 24/7 newsfeed on our website www.draktant.com offers additional links and downloads supporting the topics of this document. Please visit: 24/7 News Update


Thank you for your patience and support.
DB Schenker COVID-19 Customer Advisory Team

COVID-19 Customer Advisory Global Update – October 27, 2020

COVID-19 Customer Advisory Global Update –?October 13, 2020

We have used our utmost care in providing the information above. While the information above has been provided to the best of our knowledge and ability, the DB Schenker Group does not assume any liabilities arising from this information of the use thereof.


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