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Thursday 26 March 2020

Innovative Airfreight Solution during COVID-19

The demand for airline passengers may have plummeted during this challenging time, but the demand for global supply chains and logistics are higher than ever before and require the cargo capacity those grounded passenger aircraft represent.

Showing innovative and ingenious solutions to airfreight challenges, a Lufthansa Airbus 330 and 2 of Austrian Airlines' Boeing 777s have been converted into cargo freighters. These passenger aircraft conversions were used for their special humanitarian mission to deliver medical goods from China to Germany and Austria. 

Austrian Airlines B777 Credit Schleinzer, Vienna AirportImage

In addition to the cargo compartments, the cabin - including the passenger seats and overhead stowage, was used to optimise storage space and ensure the aircraft payload was maximised. 

Special seat covers were attached and freight was securely stowed on the seats and in the overhead bins.

On board the Lufthansa A330 were various urgent medical supplies including masks, sensitive pharmaceuticals, and other protective equipment.

Meanwhile, Austrian Airlines has completed two cargo flights transporting 130 tons of medical equipment from China (Xiamen) to Austria (Vienna) both with Boeing 777s.

This shows that despite the difficult time, airfreight is still possible. Our team at Depth Logistics, through our network of freighter operators, can help you find solutions to your aircargo enquiries. If you have any requirements, the key is to contact us as early as possible.

All for now,
Brad Skelton

$252 billion loss of revenue for the Airline Industry due to COVID19.

I thought I would share a statement from Alexandre de Juniac who is the CEO of the International Air Transport Association(IATA) on the impact of COVID19 so far on the industry. It is a very bleak picture indeed.

"Airlines are united with the global effort to stop a virus that is overwhelming our healthcare systems and threatening many lives. This is having a major impact on airlines and the value chain.

On March 5th we thought that the pessimistic scenario was a revenue loss of $113 billion. That was based on a wide spreading of COVID-19, but not as severe as the current blanket of travel restrictions. If this lasts for a three-month period, we see a 38% fall in global demand and a $252 billion loss of passenger revenue—44% down on 2019.

The figures speak for themselves. The air transport industry is in its deepest crisis ever.

Where international passenger traffic is allowed, we are mostly repatriating people to their home countries as governments permit. And we are also delivering vital goods—medicines and equipment to fight the virus or the most time-sensitive products feeding global supply chains. And I will come back with more detail on cargo later in this discussion.

IATA has been asking governments to provide a lifeline of financial support. A liquidity crisis is coming at full speed. Revenues have fallen off a cliff. And no amount of cost cutting can save the day if no cash is coming in the door. Without financial relief airlines will go bust. And that could happen en masse.

Some commentators say, "so what?" I ask them to think of the consequences. Letting this industry fail will have an impact far beyond the livelihoods of the 2.7 million people airlines employ. And it will go beyond the 65 million other jobs in the value chain. If we don't have a viable aviation industry when we come out of this crisis—whenever that may be—re-starting the global economy will be severely constrained in almost all sectors. And everybody will suffer much longer than necessary.

Fortunately, many governments understand the critical role of aviation. Among countries committing to financial relief are Singapore, China, Hong Kong, Australia, Brazil, New Zealand, Qatar, Colombia, Sweden and Denmark, Norway, and Finland. Several other governments are in the consideration stage—including a $58 billion package in the US and significant support measures from the European Central Bank.
My message to governments that have taken up this cause is to say thank you for leading. And keep watching the situation as it develops because we may need you to do more.
My message to governments that are considering doing something is to hurry-up. Every day matters.
For all the others, the potential for a $252 billion fall in revenues is an alarm bell. This is apocalypse now and you must act fast.

There are several levers that only governments have the capacity to pull:

  • Direct financial support;
  • Loans, loan guarantees and support for the corporate bond market by the Government or Central Banks, and
  • Tax relief.
Speed is of the essence.


The one part of the business that is operating is cargo. And it is doing everything it can to meet demand. And that is a big challenge because of the severe reduction in the cargo capacity that was carried on passenger flights. Airlines are reintroducing freighters and doing their best to even adapt passenger aircraft into their cargo operations.

That's because global supply chains are still running. And air cargo is essential to keeping it that way. Last week we highlighted the need for governments to ensure that air cargo can continue to play a critical role. I wish that I could say that all has been smooth. That is not the case.

A few examples to illustrate real challenges that airlines are facing.
One airline ran a repatriation flight for its nationals to a country in Asia. On the return operation the airline wants to make a stop in a third country to pick-up relief supplies. But valuable time is being wasted waiting for approval of traffic rights.

Cargo crew are being caught up in quarantine measures aimed at commercial passengers. In some cases, they are not being allowed to position on commercial flights. And there are destinations were normal accommodation for crew rest is unavailable and no alternative arrangements have been made.

And our staff intervened in Somalia and Djibouti where cargo flights fell under the same temporary flight ban as passenger aircraft.

Cargo operations are vital and time sensitive. I again call on governments to do all that is in their power so that we can get the cargo where it needs to be, fast. That means:

  • Exempting crew from quarantine restrictions
  • Expediting paperwork to mount special operations
  • And doing everything possible to reduce or eliminate costs and charges.
These measures will go a long way to keeping essential supply chains working.

To summarize, my two messages for today are:
1. This crisis has deepened. Revenue losses could reach $252 billion this year. And governments need to act fast with financial relief to avoid a liquidity crisis.
2. Cargo operations are vital. Governments need to do all they can to facilitate an industry that is scrambling to meet demand.

Airlines are desperately trying to survive in the most difficult times imaginable. We have the people and the experience to see this through. But, to be perfectly frank, we don't have the money. And we need governments to bridge us to the point where we can start to recover."

If you need support with air cargo please contact my team at Depth Logistics who are doing brilliant work with Freighter operators for our clients. I am very proud of them for the solutions they are find to current challenges and how hard they are working literally around the clock to MAKE things happen.

All for now,
Brad Skelton

Wednesday 18 March 2020

185,000 Flights Cancelled Globally due to COVID19 - Supply Chain Update 18 March, 2020

My team at Depth Logistics and I are currently fielding many questions from clients about their supply chains and what is happening in key markets with shipping and transport due to COVID19 impacts.

In response to this I offer this blog post with information we have to hand from various industry sources in Australia, the Philippines and other countries.

Firstly Depth Logistics operations are unaffected. We are here 24/7 for our clients come what may during this period and our myCargo technology gives them a definitive advantage at this challenging time. Here are our contact details.

We have moved as many team members as possible to working from home arrangements and all travel has been suspended. All non-essential in person meetings have been changed to conference phone calls and video conference.

Customs and Quarantine clearance of cargo in Australia is functioning normally and most likely will be unaffected as the system here is electronic and rarely requires manual intervention. This means that even if Government offices were to close then the clearance of cargo should keep functioning.

Airfreight capacity is serious impacted but is essential to fight against COVID19.
“Over 185,000 passenger flights have been cancelled since the end of January in response to government travel restrictions. With this, vital cargo capacity has disappeared when it is most urgently needed in the fight against COVID-19. The world’s fleet of freighter aircraft has been mobilized to make up this capacity shortfall. Governments must take urgent measures to ensure that vital supply lines remain open, efficient and effective.” said Alexandre de Juniac, IATA’s Director General and CEO.

Qantas is currently cutting 90% of international services and Virgin Airlines have announced today that by 30 March all international services will cease to and from Australia.

Freighter services are operating but under huge demand. Please see our client email advice on freighter options as at 16 March. HERE

Shipping lines have most staff operating from home. Efficiency is suffering somewhat but the key is be proactive earlier than usual in making all cargo handling arrangements.

Cargo terminals for both sea and airfreight are functioning as normal at this stage.

With airfreight so badly affected the advice below pertains to road, rail and sea freight supply chains.

North America
Barely any sea freight disruptions currently known and indeed usual road freight regulations have been somewhat relaxed to improve efficiency.

The Philippines and Malaysia
Logistics supply chains are function fairly normally despite these countries now being under lockdown. Malaysia for two weeks and the Philippines until 12 April, 2020.

-New local cases have dropped to less than ten per day.
-16/03/2020 China Ports & Harbours Association confirmed, the ports in China are in normal operation now. The storage issue is much better now. The ports are aiming for 80% stacked containers shipped out in next 4-8 weeks. Hapag-Lloyd also confirmed this information.
-15/03/2020 CCTV news stated as at last week, Major ports are back to normal operation level. However, reefer storage capability still full in some of the key ports such as Ningbo, Tianjin and Shanghai. Nanjing port is full for the dangerous goods. These should be reduced significantly around beginning of April.
-Vessel sailing schedules are back to normal - Some of the shipping lines yes, such as CMA CGM confirmed since middle of March. Others such as OOCL and COSCO will expect to be back to normal from 20/03/2020, however, there is no official announcement as yet.
-Truck operation is stable, especially local truck transport in South China and East China (Guangdong, Zhejiang, Jiangsu Province etc). However, the interstate trucks are still not back to normal as there are still some travel restrictions, most of the shipping lines and our agents are using trains to avoid this issue. There is no indication when the restriction will be totally removed at this stage.
-China’s manufacturing sector continues to normalise and as an average across the board is back to about 80% of pre-Chinese New Year capacity

As the virus continues to spread across Europe, we are starting start to see first impacts supply chains. Even though many European sites and offices continue to operate delays are being experienced due to increased health safety measures at different borders, in particular at the borders between Italy and its neighboring countries and at the borders to Croatia. Ocean Freight is currently not affected
FRANCE - We are advised some shipping lines now have their staff working from home in line with French Government directives.
ITALY – In regard to the recent DECREE ‘DPCM 9 MARZO 2020 ‘issued by the Italian Government, please note it does NOT imply any transport restrictions on goods or containers in any Italian Region via Sea, Air or Road. Therefore, if your Italian suppliers are still open & regularly manufacturing shipments they should be unaffected.

Please contact me personally for any urgent attention or advice you might need.

All for now...and wash those hands!

Brad Skelton

Tuesday 17 March 2020

Neptune Pacific Line's South Pacific Island Shipping Dominance Grows

Neptune Pacific Line (Neptune) announced it has acquired Pacific Direct Line (PDL) from PDL’s parent holding company, Pacific International Lines (PIL) four days ago. This is further consolidation of the shipping market that I have long been saying in this blog is necessary for rate restoration and therefore financially healthy shipping services.
PDL's "Melanesian Pride"
The combined resources of Neptune and PDL will enable transport, warehousing, depots and customs services to be linked and will be another step closer toward integration of shipper's supply chains across 18 South Pacific markets.

The acquisition of PDL will strengthen Neptune’s Melanesian and Polynesian network, provide a link to Micronesia and the French territories. Global market connectivity will also be enhanced as they intend to hub cargo through ports in Fiji and New Zealand.
For PIL this divestment enables them to focus more on their key liner shipping markets in Asia, the Middle East, Africa and South America.

PDL currently operates throughout the South Pacific region and specialises in providing liner shipping services from New Zealand and Australia to the South Pacific Islands. My company, Depth Logistics , has enjoyed a close working relationship with PDL, particularly with break bulk cargo, which we believe will continue under Neptune's ownership.

Please contact me if you would like any further information or to discuss your South Pacific shipping needs.
All for now,
Brad Skelton

Thursday 12 March 2020

Green and Sustainable RoRo Shipping

With the urgent scrutiny for the shipping industry to reshape the maritime transportation into a greener and more sustainable business, shipping providers are making every effort to explore all alternative options for zero emission powered vessels.

Making their way as a world leader in emissions-free solutions at sea, Norway, through their leading short sea RoRo operator, United European Car Carriers (UECC), and sustainable marine biofuel pioneer GoodFuel have launched a joint trial of GoodFuels Bio-Fuel Oil(BFO) on UECC’s roll-on/roll-off (RoRo) vessel M/V Autosky.

The trial will take 3 months and will test 3,000 metric tons of sustainable biofuel on the 140-meter, 2,080-vehicle carrier. This is a significant move in advancing marine biofuel for the RoRo shipment. The bio-bunkering will take place in the Port of Rotterdam, it will be the first in a series of bunkering operations between March and May 2020. The BFO will be tested on M/V Autosky's normal route between Zeebrugge, Belgium and Santander, Spain.

UECC expects a reduction of more than 6,500 metric tonnes of CO2 emissions on a well-to-wake basis.

With scalability, sustainable marine biofuel effectively allows shipowners and operators to comply with both the 2020 0.50% sulphur cap, as well as future regulations on carbon reduction by 2030 and 2050. GoodFuels’ BFO is the first residual-fuel-equivalent biofuel, requiring no changes to marine engines.

This is an immense lead towards decarbonisation and green shipping. It is a great example for other shipping providers to continue marine biofuel uptake within the industry.

All for now,
Brad Skelton

Tuesday 10 March 2020

Piracy at Sea is Still a Reality

Piracy at sea is still a commercial reality for shipping and the pirates are going further offshore than ever. They are also more frequently kidnapping crew members to try and collect ransom.

In the past week Tianjin Xinhai International Ship Management has lost contact with it's general cargo vessel "Huanghai Glory" (pictured) after the vessel sent a piracy alert using its Ship Security Alert System (SSAS). 

An unknown number of pirates are believed to have boarded the vessel, which is currently drifting off the coast of Nigeria. The vessel’s manager has not been able to get in touch with the vessel and its 23 Chinese crew members since the initial incident alert, reports maritime security consultant Dryad Global. The Nigeria Navy has been informed and has dispatched a vessel to investigate.

The attack is the third incident off the Nigerian coast in 24 hours, with all incidents happening in close proximity of each other. Five hours earlier a tanker was boarded 45 nautical miles south of Cotonou and this incident itself followed another approach of a vessel 50 nautical miles south of Lomé.

In the first incident, the vessel reported being approached by a skiff containing 9-10 people. In the second incident, the vessel was believed to have been boarded by 5-6 people. It is highly likely that the perpetrators of all three incidents are the same group of pirates and probably originated from within Nigeria.

Piracy off the coasts of Nigeria, Benin and Togo have increased sharply in recent years with more incidents being reported further out at sea.
It is imperative that the shippers always take out marine insurance on each and every shipment to protect themselves from piracy risks.
All for now
Brad Skelton

Wednesday 4 March 2020

Coronavirus Update - China Returns to Work Slowly & Shipping Services Normalising

China is making slow but steady progress to return to work and fight back with their economy. Shipping services should start normalising soon as a consequence.

Industrial and manufacturing activities seem to be picking up with the eastern provinces mainly back to work. As some internal restrictions are still in force, most of the manufacturers are still not operating normally at this stage due to staff shortages. Despite this it is still good news for China's and the world's economy they are gradually ramping up again.

Here are some of the latest updates on the progress of what is actually happening in China, according to logistics sources I have there.
  • Most of the eastern provinces such as Zhejiang, JiangSu, Fujian, Guangdong, Shanghai, Shangdong are back to work. Henan province has announced 16 March as the return to work date
  • Most state owned manufacturers are at 80% productivity and logistics companies back to running around 95%
  • Zhejiang 99% of companies and manufacturers are back to work. However, the productivity is around 50% and forecast to pick up to about 80% by late March
  • Guangdong 99% companies and manufacturers are back to work. Productivity for many companies is around 50% and expected in increase to about 80% by late March. However the top 300 companies there are running at 91% productivity. The province is using high speed trains and charter flights to get workers back from inner Chinese provinces where there are still some restrictions.
  • The furniture industry in Guangdong province is now back to 80% productivity and the car parts industry in Shangdong province has been fully operational since mid February.
  • The textile industry in Zhejiang province is now back to 80% productivity since 29/02/2020. 
  • In Jiangsu province 78.7% companies and factories are back to work, worker numbers are at approx. 6.25 million which is 76% of the normal number.
  • The Chinese government is encouraging the use of trains to carry containers rather than rely on trucks between cities and provinces.
  • Most provinces have reduced their control restriction from level one to level two, this means other provinces’ workers, if fit and well, are able to travel into most of the provinces. 

Hong Kong, China, City, Urban, Skyline, Buildings

Please don't hesitate to contact my team at Depth Logistics or I if you need advice about your own shipping situation.
All for now,
Brad Skelton