[ad_1]
Hong Kong’s Omicron appearance hits companies twice.
New cuts in social distance will not only reduce revenue for retailers and restaurants, but also reduce the cost of flights from Australian cherries to Wagyu beef to the financial center, raising costs and raising inflation.
Cathay Pacific Airways Ltd., the most connected airline in the city, has canceled hundreds of flights. Load capacity could drop below one-fifth of pandemic levels. Logistics costs can increase by 40% within three weeks. Importers expect the price of fruit to rise by 10%.
Hong Kong International Airport will cancel flights between Hong Kong and Omicron
A Cathay Pacific-powered plane took off from Hong Kong International Airport on January 6th.
In search of the “Covid Zero” strategy, Hong Kong has closed its bars, gyms and cinemas. At the same time, the supply chain of a city that imports most of its goods has already reached a breaking point, and companies have seen delays in shipping products such as berries and yogurt and seafood and cheese.
The threat of a rise driven by Omikron has terrified Hong Kong, which has one of the lowest vaccination rates in developed economies. Although officials have so far found only a dozen cases in the community, at least three transmission chains are being separated.
Amid fears of the Omicron variant, the government has ruled out quarantine exemptions for aircraft it previously issued, forcing Cathay to cut cargo flights. The airline will operate only about 20% of its pre-pandemic capacity this month due to a shortage of manpower. Passenger flights from eight countries, including the United States, the United Kingdom and Australia, were also banned, further reducing cargo capacity.
These two separate blows are creating a “severe cargo space shortage,” said Gary Lauk, president of the Hong Kong Freight Forwarding and Logistics Association.
Businesses that are heavily dependent on imports are suffering the brunt of the disruption. Suppliers expect a shortage of everything from eggplant to lobster. European flowers for the coming New Moon may also be scarce, as well as fruit and vegetables taken by plane from places like the UK and the Netherlands.
Hong Kong’s retail and restaurant sectors, which had just begun to recover from the cuts in previous months, may now lose a top window of spending during the Chinese holiday season. Sales in both sectors reached HK $ 326 billion ($ 42 billion) in the first three quarters of last year after the city relaxed its social distance rules. That figure was nearly 30% lower than in the same period in 2018, before a series of protests took place in Hong Kong last year, causing further economic damage.
Many businesses are facing logistical nightmares. Richard Poon, managing director of On Kee Dry Seafood, said orders for canned abalone and shellfish were stuck in Australia. His team relies on air freight for more than 30 percent of its supply, he said, and the store has increased orders delivered by plane around November to prepare for the holidays.
“Now the offer will be even tighter,” he said. “We are concerned that some goods for sale to customers may be sold out.”
Jacques Derreumaux, of Cheese Club and WHAT’sIN, one of the founders of French cheeses and fresh fruit and vegetable delivery services, said it has now decided to route shipments through limited cargo flights now banning passenger flights from France. Continued disruptions to air travel would be “very problematic for all importers,” if extended, he said.
“The supply chain is falling”
Hong Kong’s strict virus rules are largely in line with mainland China, and it still maintains zero infections as its goal, even though most of the world adapts to living with the virus. However, with 7.4 million cities relying on imported goods to survive as the vast continent does not, it worries that the virus strategy that requires isolation is unsustainable.
Michael Li Hong, the honorary secretary of the Chinese Importers and Exporters Association of China, said that the reduction in travel will lead to a rise in retail prices. Lik announced a longer delivery time and a possible 30% increase in transportation costs.
Consumers may see prices for fresh flowers rise by between 20% and 30%, for example, because they usually ship from Europe to Hong Kong, Lik said. Prices can also be increased at Japanese restaurants that use premium seafood ingredients, as well as at Chinese restaurants that offer seafood festivals at festivals.
Lau, of the Hong Kong Freight Forwarding and Logistics Association, said there are already signs that the “air logistics chain is falling”.
“As long as the government does not alleviate the pandemic control measures, we believe the situation will not change in the short term,” he said.
[ad_2]
Source link
