NOVEL CORONAVIRUS UPDATE - Date : March 2nd, 2020

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NOVEL CORONAVIRUS UPDATE - Date : March 2nd, 2020
NOVEL CORONAVIRUS
UPDATE
Date : March 2nd, 2020
NOVEL CORONAVIRUS UPDATE - Date : March 2nd, 2020
H i g h l i g h t s – M a r 2 nd

   China – factory resume in production rates

   ▪ Over 90% of the government owned enterprise are resumed in production
   ▪ By the end of last Fri (Feb 28th), following are the rates of several key provinces
       •   Zhejiang 99.8%
       •   Jiangsu     96%
       •   Anhui       94.8%
       •   Hunan       93.5%
       •   Guizhou 100%

   ▪ For the rest of coastal provinces : Shandong, Fujian,
     Liaoning, Jiangxi, Hebei and Guangdong, the
     resumption rate is over 80% by end of last Wed
     (Feb 26th).

    Source : https://finance.qq.com/a/20200228/048126.htm

02 March 2020                                               Copyright © 2020 Yusen Logistics. All rights reserved   2
H i g h l i g h t s – M a r 2 nd

   China – Shenzhen city (South of Guangdong province):
   no permit is needed before resume operation
   ▪ Effective from Feb 23rd, no needed to apply permit before resume to work
   ▪ Instead,
        ▪ Factories and enterprises have to following the set of requirements
           imposed by government before resume to work
        ▪ Local authorities would check the implementation status of those
           requirements
        ▪ Non-compliance factories and enterprises have to take corrective actions,
           production have to stop if eventually unable to comply the set
           requirements
        ▪ Health information of workers have to submit to the local governments for
           record keeping

      Source : http://www.sz.gov.cn/cn/xxgk/zfxxgj/zwdt/content/post_6738283.html

02 March 2020                                                            Copyright © 2020 Yusen Logistics. All rights reserved   3
H i g h l i g h t s – M a r 2 nd

   South Korea – COVID-19’s effects on supply chains
   ▪ South Korea is highly vulnerable to supply chain disruptions, the outbreak threatens to slow domestic
     demand as residents spend more time in isolation.
   ▪ The country started the year seeing green shoots amid reduced U.S.-China trade tensions. However,
     with the virus spreading fast inside South Korean borders, the shock to domestic consumption
     (accounting for 50% of gross domestic product) will be significant. The South Korean markets and
     currency have suffered, while manufacturers’ confidence has plunged the most in five years.
   ▪ So far there has been limited impact on cargo operations from the outbreak within Korea, and ports
     and airports function mostly as normal. But with Korea’s trade so closely linked to China, vast
     swathes of the shipping sector are suffering from the factory and transport disruption there.
   ▪ In Feb, the shutdown in China has also had a huge impact on Korea’s automotive manufacturers,
     which have struggled to keep just-in-time supply chains flowing.
   ▪ This led Korean OEMs to reduce production in February and is highly likely to affect production in
     March as well. In February, the volume is expected to drop approximately 35% from the initial
     production forecast.
     Source : https://qz.com/1809436/coronavirus-is-hobbling-factories-in-cambodia-vietnam-myanmar/ , https://theloadstar.com/south-korean-shipping-sector-heading-for-disaster-as-virus-crisis-hits-industry/

02 March 2020                                                               Copyright © 2020 Yusen Logistics. All rights reserved                                                                                4
H i g h l i g h t s – M a r 2 nd

   Vietnam – shipping firms in troubled waters as coronavirus hits trade
   ▪ Vietnamese shipping firms are reporting falling revenues after the coronavirus outbreak brought trade-related
     activities to a standstill in China. Ships are docking at other ports outside China, which accounts for 40 percent of
     international shipping in Vietnam, but this pushes up costs.
   ▪ Quy Nhon Port in central Vietnam now operates only 20 days a month instead of 30, with shipments falling by 15
     percent. Last month it handled 100,000 tonnes less than targeted.
   Source : https://www.hellenicshippingnews.com/vietnam-shipping-firms-in-troubled-waters-as-coronavirus-hits-trade/

   Italy – €3.6bn stimulus to tackle coronavirus
   ▪ Italy will inject €3.6bn into its economy to mitigate the impact of the largest outbreak of coronavirus in Europe as
     policymakers around the world consider the consequences of transport and supply disruptions resulting from
     efforts to contain the disease.
   ▪ Roberto Gualtieri, Italy’s economy minister, said on Sunday the government would introduce tax credits for
     companies that reported a 25% drop in revenues, as well as tax cuts and extra cash for the health system. The
     package will amount to 0.2% of GDP, and would come in addition to €900m worth of measures unveiled on
     Friday for the most severely hit regions.
   Source : https://www.ft.com/content/a6f59348-5bae-11ea-b0ab-339c2307bcd4

02 March 2020                                                               Copyright © 2020 Yusen Logistics. All rights reserved   5
Restrictions from Vessels from China

▪ US
Non-passenger vessels are allowed to operate in the US with restrictions if they have been to China or embarked
passengers in China within the last 14 days under the condition that there are no sick crewmembers.
Any vessels with sick crewmembers are required to notify the nearest Coast Guard Captain of the Port.
▪ Australia
Any vessels that have left China or transited through the country after 01 February and less than 14 days prior to
the date will be required to meet coronavirus requirements set by the government.
▪ Vietnam
All Crews on those vessels not ever called Chinese ports, but have Chinese Nationality & signed on board around
14 days are also not allowed to go onshore when calling ports.
▪ Singapore
Maritime and Port Authority of Singapore (MPA) has implemented temperature screening at all sea checkpoints.
Visitors having a travel history in Hubei or possessing PRC passports issued in Hubei, will not be allowed to enter
or transit through Singapore.
▪ Indonesia
Vessels that have visited China during their last 10 port stops will be thoroughly inspected by the Port Health
Authority. Anyone suspected of being infected with the virus must be treated by authorities.
02 March 2020                      Copyright © 2020 Yusen Logistics. All rights reserved                              6
Restrictions from Vessels from China

▪ Turkey
Cargo ships have been permitted to dock although they will undergo strict inspections.
▪ Philippines
The Philippine Ports Authority said workers in ships coming from China are prohibited from disembarking to
prevent the spread of the virus.
▪ South Korea
Any vessel that visited China within the last 14 days will be inspected by officials from the Korea Centres for
Disease Control and Prevention agency before entering. The vessels can only enter South Korean ports if the
inspectors find no sign of infection and give them the all-clear.
▪ Kenya
There will be an increase of vessels’ docking time at the port, as Kenya Ports Authority (KPA) screen all crew
members for the virus and inspect all vessels entering their ports.

02 March 2020                     Copyright © 2020 Yusen Logistics. All rights reserved                           7
Restrictions from Vessels from South - Korea

▪ Kuwait
Completely reject cargo vessels from South Korea

▪ Vietnam
Country’s capital Hai Phong City - the entire vessel will be checked by staff from Hai Phong International
Health Quarantine Center, with all crew members to remain on board.

02 March 2020                                                                                                8
Yusen Logistics Operation

    Yusen China offices
    ▪ From Mar 2nd, total 80 staffs (around 40% of total staff force) will work at office
    ▪ Work-from-home or remote office will still be the dominant mode
    ▪ No disruption of operation
    ▪ Communication via e-mail, conference call or chat group

    Yusen Italy and South Korea
    ▪ Normal operation and no impact on SCS shipments

    Yusen HKG Control Tower (CTO)
    ▪ HK CTO exercises alternative shifts at office, i.e. around 50% of the staff are worked from
      home, while another 50% are worked at the office.
    ▪ No disruption of operation & communication

02 March 2020                                   Copyright © 2020 Yusen Logistics. All rights reserved   9
Yusen Logistics Operation:CFS,Trucking,Carriers
    Origin           Customs                              Warehouse                                             Truck                                     Carrier                         Terminal
                                                                                                Trucking service is still limited in       1/. Normal in operation
    Dalian      Normal operation   Normal operation                                             supply, but gradually resume to            2/. Majority of staff are worked   Terminal as normal
                                                                                                normal.                                    from home
                                                                                                Trucking service is still limited in       1/. Normal in operation
    Fuzhou      Normal operation   Normal operation                                             supply, but gradually resume to            2/. Majority of staff are worked   Terminals as normal
                                                                                                normal.                                    from home
                                                                                                Trucking service is still limited in       1/. Normal in operation
   Nanjing      Normal operation   Normal operation                                             supply, but gradually resume to            2/. Majority of staff are worked   Terminals as normal
                                                                                                normal.                                    from home
                                   Trucks from all cities of China are allowed for entry,
                                   only if drivers can pass the health check and stay in        Trucks from all over China are             1/. MSK resume work on Mar.1st;
                                   their vehicles.                                              accepted, on the condition that the        2/. CMA/APL/HPL/ONE resume to
    Ningbo      Normal operation   1. Ningbo National Logistics – Mon to Sun 08:30 until        drivers can pass the health check and      work on Feb.17th'                  Terminals as normal
                                   20:00                                                        stay in the vehicle during the entire      3/. Others are mostly work-from-
                                   2. Ningbo Port Southeast Logistics – Mon to Sun 08:00        operation process.                         home.
                                   until 2:00
                                                                                                                                           1/. CMA/ONE will implement home
                                                                                                                                           office mainly plus office on duty
                                                                                                Trucking service is still limited in
                                                                                                                                           2/. MSK announced all staff work at
   Qingdao      Normal operation   Normal operation                                             supply, but gradually resume to                                                Terminals as normal
                                                                                                                                           home until the end of Feb
                                                                                                normal.
                                                                                                                                           3/. Others carriers are home-office
                                                                                                                                           in majority

                                   1/. EED (WGQ) operates as 24 hours a day. No
                                   limitation imposed on truck drivers as long as they can
                                   pass the temperature checks.
                                                                                           Trucking service is still limited in            1/. Normal in operation            Terminals congested owing to
                                   2/. DFJF (Linggang) are resumed to normal operation.
   Shanghai     Normal operation                                                           supply, but gradually resume to                 2/. Majority of staff are worked   upsurge of import and reefer
                                   Except from Hubei province, trucks from all over China
                                                                                           normal.                                         from home                          containers
                                   are accepted, drivers are subject to health checked and
                                   limited in assigned operation area.
                                   3/. Medlog : operating time Mon to Sat 8:30-17:00

02 March 2020                                                                      Copyright © 2020 Yusen Logistics. All rights reserved                                                                     10
Yusen Logistics Operation:CFS,Trucking,Carriers
     Origin              Customs                         Warehouse                                              Truck                               Carrier                           Terminal

                                                                                                                                     1/. Normal in operation
                                          Warehouse operation is normal, 1 day          Trucking service is still limited in supply,
     Tianjin    Normal operation                                                                                                     2/. Majority of staff are worked from   Terminals as normal
                                          reservation in advance is needed.             but gradually resume to normal.
                                                                                                                                     home

                                                                                                                                    Most of the main carriers are resumed
                Normal operation but in   Resume to work NO earlier than Mar 10th       Resume to work NO earlier than Mar
     Wuhan                                                                                                                          in form of work-from-home since Feb On duty staff arranged
                low efficiency            24:00                                         10th 24:00
                                                                                                                                    3rd

                                                                                                                                     1/. Normal in operation
                                                                                        Trucking service is still limited in supply,                                         Terminal congested due to
    Xiamen      Normal operation          Normal operation                                                                           2/. Majority of staff are worked from
                                                                                        but gradually resume to normal.                                                      too many empty containers
                                                                                                                                     home

                                                                                                                                     1/. Normal in operation
                                                                                        Trucking service is still limited in supply,
   Shenzhen     Normal operation          Normal operation                                                                           2/. Majority of staff are worked from   Terminals as normal
                                                                                        but gradually resume to normal.
                                                                                                                                     home

      Italy     Normal operation          Normal operation                              Normal operation                            Normal in operation                      Terminals as normal

  South Korea Normal operation            Normal operation                              Normal operation                            Normal in operation                      Terminals as normal

02 March 2020                                                               Copyright © 2020 Yusen Logistics. All rights reserved                                                                    11
Market Update Airfreight

    Sea-Air mode
    ▪       A solutions could help shippers to avoid airfreight shortages and price spikes as production lines in China soon get
            back underway.
    ▪       Ocean transport to move the goods to a transshipment point, before flying to destination, could prove attractive
            for semi-urgent shipments that want to avoid any airfreight price surges or space shortages, but can’t afford to
            wait for long before arrival to the consumption markets .
    ▪       Singapore is around 10 days quicker than the traditional air-sea hub of Dubai, adding value and speed.
    Source : https://www.aircargonews.net/airlines/sea-air-solutions-set-to-help-alleviate-coronavirus-capacity-crunch/

    Shortage of capacity
    ▪       About 70 airlines have canceled all international flights to mainland China, and an additional 50 have curtailed
            operations, resulting in an 80% reduction in foreign airline capacity and a 40% reduction by Chinese airlines.
    ▪       American Airlines, and United Airlines suspended service to China and Hong Kong until late April, while Air
            Canada, British Airways and Finnair extended flight suspensions to mainland China until late March and cut more
            flights to Hong Kong.

02 March 2020                                                                 Copyright © 2020 Yusen Logistics. All rights reserved   12
Potential Impact To be Considered

Production                                                                                      Space and Equipment
▪ Late opening of factories may result to manufacturing and                                     ▪ Slow booking release or response from carrier as work from
  delivery delays.                                                                                home or booking agent team not in full force.
▪ Parts and material packaging availability severely impacted                                   ▪ Port congestion.
  within the lockdown cities. Not all establishments and
  authorities are officially open.                                                              ▪ Container rollovers and possible delay.
▪ Workers shortage as returning workers may be restricted and                                   ▪ Tight vessel space and equipment availability could be
  subject to 14 days quarantine. Public transportation is also                                    expected once production resumes normal as cargo readiness
  limited.                                                                                        are all at the same time.
                                                                                                ▪ Limited air cargo space due to suspended flights.
Transportation
▪ Intercity transportation might be limited due to entry and exit                               ▪ More blanked sailings and increased freight rates
  measures implemented by various cities
▪ Inland transit time could be longer due to road blocks and
  checkpoints.
▪ Possible drivers shortage and truck supply.
▪ In some provinces, barge and feeder operation has been
  suspended. Trucking service is very difficult to arrange and
  therefore significant price increase is expected.
                                        Copyright © 2020 Yusen Logistics. All rights reserved                                                                  13
Disclaimer : Yusen Logistics does not control nor guarantee the accuracy, relevance, or completeness of the information found herein. Any hyperlinks from this circular, exists for information purposes only and are meant for your convenience.

02 March 2020                                                                                                 Copyright © 2020 Yusen Logistics. All rights reserved                                                                                 14
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