Newsletter Blast: China COVID Restrictions Easing & the Latest in Culture & Global Supply Chains
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They say it's Friday Eve! We’re just a newsletter, standing in front of creative & supply chain executives, asking them to delay the onslaught of beachy hard-seltzer commercials that arrive with the first hint of warmer springtime weather. Let the countdown to the weekend commence early!
In today’s edition:
Covid Impact in China - State of Global Supply Chains
Latest Cultural & Marketing News
Latest Happenings at City Global
Navigating Ocean & Air Freights across Asia to North America & Europe
Trending USA-made & Asia-Pacific products that are available for Prototyping Now
What is the State of the Global Supply Chains?
Disruptions and restrictions due to Covid outbreaks in China cause headaches for production and trucking in Southern (Shenzhen/Dongguan) and Eastern (Shanghai) regions. Ocean carriers continue to assess impacts to bookings and have not yet announced any blank sailings. Additional volatility drivers in the market remain severe congestion, equipment imbalances, sliding vessel schedules, port omissions, blank sailings, and increased fuel charges.
Shenzhen: Good news -- After the completion of three rounds of mass nucleic acid testing, all districts in the city have resumed normal operation in an orderly manner starting from March 21, with just a few exceptions for certain areas, e.g. the Futian "South of Binhe Avenue" area where traffic control and community "whitelist" management continue. Public transportation and subways are all reopened, and citizens can enter and exit freely with "48-hour negative" testing results.
Dongguan: has also resumed bus and subway services from today after two rounds of mass nucleic acid testing. Some areas are back at being classified as "low risk" areas. The epidemic prevention and control situation is still severe, but basically controllable. Dongguan Epidemic Prevention and Control Headquarters said that it is necessary to implement differentiated epidemic measures like "one enterprise, one policy" and "one factory, one case" policies to ensure the necessary production and operation of enterprises. No official notice on lifting the lockdown completely yet but we believe the same approach as its neighboring city Shenzhen will come soon.
Shanghai: Dynamic control policy and nucleic acid testing are carried out district by district in closed management. However, traffic control seems a little bit better. Some highways are open but some remain closed depending on province policies. The government requests that citizens get a negative covid test report within 5 days before they go back to work this Monday.
What's the general shipping/factory closure update?
For Shenzhen/Dongguan (PRS Region):
With the situation normalizing, offices and factories in Shenzhen are back to open. Factories are ramping up production this Monday. For Dongguan city, the good news is that zero Covid cases were reported as of 03/21. We expect that more factories will soon resume normal operations too.
For Shanghai (PRE region)
The majority of the factories are operating as usual. A few are shut down to confirmed Covid cases. The overall situation is getting stable.
The situation differs from district to district. Factories might face two-day closure when requested by their district authority to do mandatory nucleic acid trests.
How long is it taking to ship goods by sea?
This week, the TPEB (Transpacific Eastbound (e.g., Asia-to-North America) route increased by two days to 109 days. That marked the third week of increasing shipping times but is still below the record high of January.
FEWB Far East Westbound (e.g., Asia-to-Europe) increased by five days to 116 days, setting a record high. The time taken to handle goods in Asian ports and for the maritime leg of journeys increased.
Can loafing also be work? Meta employees must now do their own laundry. Barca's destruction of Madrid. The black artists leaving America. Pete Wells reviews the new Commerce Inn. To cancel Russian art or nah? An ancestral home in Italy gets a second act. Jenna Lyons’ Soho Loft. Hodinkee’s new CEO. Shackleton’s lost ship found in Antartica. Rihanna weights $3B IPO for Fenty. The man who got fired by his own DAO. 'Solutions that create problems.' Nike’s designs are still killing it after 50 years. And an article on the wartime hoodie.
The Monocle Quality of Life Conference
Will be held in Paris this year. Monocle
What Google search isn’t showing you
The latest cultural banger from Kyle Chayka. New Yorker
Two ultra-fast delivery startups
Shut down in a single week. CNN
Playboy wants to reinvent itself
Into a tech company? The Information
Meta: Everything you need to know about the metaverse but were too afraid to ask.
Watch: This absolutely mind-blowing Nike ad running on a billboard in Tokyo.
Stat: 238. The number of anti-LGBTQ+ bills filed in 2022 so far, according to an NBC News analysis of data from the American Civil Liberties Union and the LGBTQ+ advocacy group Freedom for All Americans.
Pickleball and the 1%.
Unofficially (or officially, depending on who you ask), pickleball was ‘the’ sport of the pandemic. And though we’ve largely made our way out of the pandemic, the sport shows no signs of slowing down, especially among the moneyed set. A piece at Town & Country explores why: 'The fence is a little lower, there’s less sprinting involved, and you’re physically closer to both your teammate and your opponent, making it inherently a lower-impact sport that’s big on on-court banter. It’s less physically demanding––though certain enthusiasts are said to be prone to injuries––and doesn’t necessitate the years of technique that other country club sports can require. It’s easier to get into, it’s got a quirky name, the ball makes a satisfying sound when it whacks against the pavement—and the sport is spreading like wildfire.'
More folks have gone pickleballin’:
Networks like CBS are broadcasting games
The New York Times declared pickleball “ready for prime time”
Major sports brands are selling pickleball gear and sponsoring pickleball players
The kids have caught on, with emerging pickleball influencers as young as Gen Alpha
A thoughtful piece at The Guardian asking whether NFTs are actually art or not. Great thought here: 'There is something oddly perfect about the marriage between NFTs and the most memorable figures of this period, maybe because many of the most popular works tend to approximate a mid-to-late-00s aesthetic: bright, cartoonish, closer to a two-dimensional Funko pop than to fine art. . . . [It’s] art that exists as a status symbol-cum-investment, packaged in a shell so mainstream that it requires absolutely no knowledge of art history to appreciate its style, has long been of interest to those looking to express themselves, impress their moneyed peers, and add to their financial portfolios in one fell swoop.'
West Coast Port Congestion Moves East The Loadstar has reported that the average waiting times for vessels at both Los Angeles and Long Beach ports has been reduced by half, with the number below 50 ships. The easing of congestions is due in part to supply chain disruptions in China, improved landside operations, and the increasing preference for ports on the East Coast and Gulf Coast.
Canadian Pacific Railway Ceases Operations Following Failed Labor Talks
SupplyChainBrain has reported that one of Canada’s largest railways will be halting their operations after failing to reach a labor deal with unionized workers, who were pushing for increased wages and improved benefits and pensions. This disruption is likely to further impact supply chains, particularly for fertilizer markets.
U.S. House passed Bill to revoke Permanent Normal Trade Relations with Russia & Belarus
The House passed a bill to end Russia's and Belarus's ability to export goods to the US under Permanent Normal Trade Relations (PNTR) status, placing Russian and Belarussian imports in Column 2 of the Harmonized Tariff Schedule. The designation would result in higher tariff rates for Russian and Belarussian imports. The bill and another bill on the ban of oil, natural gas and coal imports from Russia will go to the Senate simultaneously.
Factory Output News
China 2022 Jan to Feb China’s automotive exports volume has increased 75% Source
Taiwan Major electronics manufacturers are planning to expand production in Taiwan and overseas Source
Vietnam Export turnover of over 1 billion USD for nine commodities in the first two months of 2022 Source
Malaysia External Trade Development Corporation identified Central Asia, mainly Kazakhstan and Uzbekistan as potential markets for expansion and trade Source
Indonesia Construction of the first Hyundai Motor Co. manufacturing plant completes in Indonesia Source
India Suzuki plans to invest $1.37B in its India factory to produce electric vehicles and batteries. This is the first major EV plan announced by Maruti Suzuki for India in a bid to align itself with its national strategy. Source
TPEB Transpacific Eastbound (e.g., China-to-US) increased by two days to 109 days. That marked the third week of increasing shipping times but is still below the record high of January.
FEWB Far East Westbound (e.g., China-to-Europe) increased by five days to 116 days, setting a record high. The time taken to handle goods in Asian ports and for the maritime leg of journeys increased. It should be noted that signs of an increase in the Asia port side had already been apparent in the Stage 1 indicator (see below).
Asia → North America (TPEB)
Disruptions and restrictions due to Covid outbreaks in China cause headaches for production and trucking in Southern (Shenzhen/Dongguan) and Eastern (Shanghai) regions. Ocean carriers continue to assess impacts to bookings and have not yet announced any blank sailings. Additional volatility drivers in the market remain: severe congestion, equipment imbalances, sliding vessel schedules, port omissions, blank sailings, and increased fuel charges. The moving market remains primarily at premium levels with some pockets and routings open for FAK.
Rates Rate levels remain elevated and the premium market is strong.
Space Undercapacity, except in pockets
Capacity/Equipment Critical/Severe Undercapacity
Recommendation Book at least 3-4 weeks prior to CRD. Consider premium options. Be flexible in regard to equipment and routings. Check closely with suppliers to understand any Covid-related impacts or changes to production outputs and forecasts.
Asia → Europe (FEWB)
The COVID situation in China has somewhat improved but does continue to have a business impact. Factory production within Shenzhen has partially resumed since Monday after some of the lockdown restrictions were lifted. Dongguan is also expected to have more factories resume normal operations soon. Trucking shortages due to strict COVID rules are still a challenge for a number of ports. There is available space on FAK and spot across all alliances but carriers are still not open for more long-term named accounts. It is expected that there will likely be some port omissions and blank sailings announced by carriers as a response to recent developments.
Rates Rates remain at a high level but have been on a downward trend throughout March due to a slowdown in the market.
Space Tight space situation
Capacity/Equipment Severe equipment shortage across all Asia origins.
Recommendation Book at least 2 to 3 weeks prior to CRD. Be flexible in regard to equipment.
Indian Subcontinent → North America
Equipment shortages and congestion grow. India, predominantly a net importer, has seen tremendous growth in exports in the past 2-3 months. This trend has now made India a balanced importer/exporter which means equipment is leaving just as fast as it is coming in. This trend is expected to continue as supply chains shift from other manufacturing countries. Congestion is also growing in S/SE India as well as Colombo, Sri Lanka. A fuel rationing measure in Colombo is resulting in a severe lack of trucking capacity. Delays should be expected for transshipment cargo utilizing Colombo.
Rates Maintained through 2H March. Premium rate levels should be expected for smaller Indian ports and Bangladesh as demand exceeds vessel/equipment supply.
Space to the USWC is and will remain a challenge into 2022. Port omissions on services to the USWC continue to cut capacity out of the Indian sub-con. Recommendation is to move on premium services. Space to the USEC will be difficult into Savannah, Charleston, and New York until April as bunched vessels off the coast of USEC are resulting in longer turn-around time back to origin and port of discharge omissions. This leaves a gap of sailings for the most consistent services typically relied upon for ISC to the USEC. Equipment deficits are being reported across many ports in India. Most affected are the S/SE ports, Kolkata, and Inland container depots in North India. Recommendation remains to load via wet port and avoid Inland container depots when possible. ICDs are a chokepoint for containers which often leads to delays in SO release. Booking on some premium services will give you priority on equipment.
Asia
N.China: Rates continue to decrease as a result of a shortage of demand. Some key reasons are factory closures, trucking issues, and the lack of manpower due to quarantine policies. The number of positive Covid cases in Shanghai has also increased and the situation is not expected to improve this month.
S. China: Carriers ex-HKG have reduced their flight frequency due to the Covid outbreak and the Russia-Ukraine conflict but the market demand is slowly getting better as Shenzhen gradually lifts restrictions. Cross-border trucking capacity remains very limited, however, some factories and terminals are beginning to resume work. Rates remain similar to last week.
Taiwan: TPEB demand is picking up, largely in part due to the quarter ending. Flight capacity to popular hubs such as LAX and JFK is mainly available at the end of the week at the earliest. FEWB demand and market capacity remain stable. Carriers have again announced fuel increases starting March 22, and with an anticipated hotter TPEB market air freight rates are expected to increase as well.
SE Asia: Demand ex-Thailand remains at a similar level to last week, but there is potential for demand to increase as companies rush to ship by the end of the quarter. The market ex-northern Vietnam has picked up slightly but rate levels remain the same. Some capacity has been reduced due to aircraft maintenance. TPEB demand ex-southern Vietnam has increased a bit with rate levels maintaining at similar levels. FEWB demand remains weak.
Europe
Demand is stable again this week, the upcoming change in season is seeing a small increase in air freight requests for inventory to be stocked for Summer.
Rates are at a stable high and we are seeing fuel surcharges be the reason for pricing increases by airlines. The IATA Jet Fuel Index is at record high levels, and airlines will pass through the cost.
Freighter capacity is heavily reduced and booking to uplift window is approx 10 days.
Deferred routings are still providing a viable routing option if already tight lead times can take it. We also see cheaper options on the market to secondary hubs where airlines have regular passenger flights.
Slight congestion at EU terminals, through high volumes, therefore a potential increased transit time.
