Flight capacity in Shanghai continues to improve compared despite the city continuing its Covid lockdowns while shipping disruptions extend as cargo backlogs pile and trucking remains restricted.

Flexport said in a market update that Shanghai continues to undergo lockdown due to high numbers of Covid cases. 

“Flight capacity has increased slightly compared to last week but is still affected by a lack of demand due to lockdown measures in nearby cities,” the freight forwarder said, adding that airlines have reduced rates this week as the market outlook is expected to be slow during the long holiday.

Disruptions continue

For Asia-Europe shipping, it noted that “disruptions continue to dominate the trade.”

“The Shanghai lockdown and various other local restrictions across cities in East and North China are affecting factory production, warehousing, and trucking availability. On top of this the current week is affected by the extended Labor Day holidays in China,” Flexport said.

“On the destination side in Europe, there is the impact due to congestion in several ports which is causing re-routings and further delays.”

The report noted that rates remain at a high level but have been on a downward trend since March due to a slowdown in the market. 

Flexport said this trend looks to continue as we move into May.

For Asia-North America, the freight forwarder said congestion eases at coastal destination ports while Shanghai remains under lockdown due to Covid-19 outbreaks in the major manufacturing region. 

“The lull in vessels awaiting berthing is likely to be temporary, as a spike in imports — and therefore destination congestion and associated headaches — is expected once Shanghai can resume normal production and shipping activity,” Flexport said. 

“In the meantime, cargo backlogs are accruing just as traditional peak season gets closer. At the same time, the current balance is such that there is more space available on the Transpacific Eastbound (TPEB) lane relative to demand than has been the case for the majority of the last two years,” it added.

Flexport said rate levels in this trade “remain elevated” relative to the pre-Covid market with softening in several pockets while there’s critical-severe under capacity in the trade lane.

For air cargo in South China, Flexprot said frequency is yet to recover from the impact of Covid-19.

“Ex-South China the flight frequency has still not recovered due to the Covid situation and the conflict in Ukraine. The labor holiday has led to slowed demand and decreases in rates,” it said.

For Taiwan, it added that demand is “relatively slack” compared to last week as factories just came online after the holiday. 

The freight forwarder said capacity is expected to pick up at either the end of this week or the beginning of next week. Airlines have announced fuel increases starting from May 10.

Meanwhile, for Southeast Asia, demand is expected to be very soft this week due to the long holiday, it said on May 3.

Shanghai lockdown continues

Shanghai authorities have increased anti-virus restrictions once again, just as the city was recovering from a month of rigorous lockdown due to a COVID-19 outbreak.

Residents have been advised to stay at home and are prohibited from receiving non-essential deliveries as part of a “silent period” that will run at least until Wednesday, according to notices issued in numerous districts.

According to the warnings, the tightened measures could be extended based on the findings of mass testing.

The latest measures come as Shanghai continued to report a fall in Covid-19 cases. On Monday, the city reported a six-week low of 3,947 cases down from the 3,975 infections reported on Saturday.