China's checks on PPE exports push up air cargo rates, capacity shortage worsens

THE Chinese Central Government's crackdown on poor quality medical exports has driven up air cargo costs and worsened congestion in South China.

Following widespread complaints of defective personal protective equipment (PPE), including face masks and coronavirus test kits, Beijing has tightened quality controls and stepped up customs inspections.

New regulations include a decision by China's Ministry of Commerce to boost the export quality supervision of "non-medical" masks, including a blacklist of suppliers which failed to gain export certification, reported UK's The Loadstar.

"In Shanghai, customs brokers have raised rates for export clearance by up to six times, due to extra paperwork and processing time," according to Norman Global Logistics (NGL).

The company said: "So far this is impacting the Hong Kong, Guangzhou and Shenzhen regions, but we expect it to happen in the rest of the country, as at least 90 per cent of all medical cargo will require customs inspection."

NGL confirmed claims that the new export restrictions were preventing PPE manufactured in the mainland from transshipment in Hong Kong, and "more or less forcing" the cargo through mainland airports.

While many governments have enacted "air bridges" to cater for supplies for their healthcare systems, space is still scarce and rates are at a premium due to the absence of bellyhold capacity, said Scan Global Logistics (SGL).

"We now have air freight terminals in Shanghai, Xiamen and Guangzhou on red alert, while Shenzhen changed to yellow, as terminals in these cities are overheated with massive amounts of cargo, particularly PPE," the forwarder added.

Similarly, Flexport describes China's air cargo market as "very hot", due to lack of capacity in the air, but also on the ground in warehousing space and ground handlers.

"This leads to delays and longer transit times," said Flexport's senior director of airfreight EMEA David Wystrach.

"On top of increasing rates, we're seeing another level of complexity in supply chains, with an increase in demand for South China uplift and more volumes flying out of Hong Kong."

The more-stringent PPE export controls are impacting ocean freight, too. According to Global Logistics Solutions India co-founder Naveen Prakash, thousands of containers packed with face masks have been detained in China because the goods failed to meet quality standards.

"About 1,600 manufacturers are blacklisted, due to quality checks and bad paperwork," he explained, adding that buyers need to carefully check whether Chinese manufacturers meet the strict new criteria.

"It's our responsibility to highlight this as many importers are first-time buyers of masks," he said.

Furthermore, shippers could look to less-than-container load (LCL) ocean freight to bypass the air cargo congestion, Mr Prakash suggested. "Our China to India LCL services are 100 per cent operational and will help avoid any cost escalations."

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