Current global shipping problems have caused delays, losses, and wasted time and energy for exporters and importers all over the world. Instead of being limited to countries that COVID most strongly impacted, the turmoil has expanded to every country with an economy that hinges on exports and imports.
Generally, the overall economy in the United States does not react strongly to political events. Even under President Donald Trump’s administration, events like the contentious Supreme Court nomination hearings for Brett Kavanaugh and the George Floyd protests did little to directly impede economic activity. National security concerns and major actions by the Department of Justice tend to have a greater impact, but even these drops in the stock market and investment tend to be temporary.
However, long-term international crises like the COVID-19 pandemic have multiple effects on world trade and domestic economic activity. Supply chain interruptions and drug shortages are just part of the big-picture problem. Top officials from the White House and chief executives from major transportation companies worldwide were largely powerless as the ripple effect spread through multiple modes of transportation.
Supply Shortages
Like any other service, transportation of goods has a limited capacity, leading to shortages. When international air travel dropped dramatically, it resulted in a serious lack of space on passenger planes, with more people relying on cargo courier services and ocean freight as a result.
Early in 2020, there was a shortage in the goods being produced since China was forced to shut down large portions of its economy to stop the virus’ spread. Now that China is back at full production, the only shortage is in capacity on ships and planes moving around the world.
There has also been a shortage of crews in some parts of the world, especially in areas with significant COVID outbreaks. The Port of Los Angeles has struggled due to a shortage of space to store goods or a lack of port workers available. A COVID-19 outbreak onboard a ship can have a catastrophic effect on that ship’s schedule.
Demand Changes
Some industries, like clothing and textiles, have seen decreases in demand, which drives down shipping demand on some routes. However, other sectors, especially electronics and home goods, have seen a definite increase. This is partly due to a rise in online shopping driven by stay-at-home orders.
Although international shipping usually involves bulk wholesale and importing, some industries have seen increased individual international orders. This varies widely depending on the route.
Travel Restrictions
Most countries that depend heavily on imports and exports have taken a practical approach to manage quarantines and travel restrictions. Instead of putting a blanket ban on new arrivals and shutting the borders completely, they have taken steps to allow travel necessary for business.
However, some countries have sharply curtailed arrivals or made life much more uncomfortable for sailors. In some cases, sailors from specific nations have faced restrictions while their shipmates from other countries have not.
In some areas, this may be the single biggest factor throwing shipping into turmoil. A complete lack of passenger flights will make airmail much less affordable or much slower, and strong restrictions on ocean arrivals may cause a backlog.
Oil Price Fluctuations
The price of oil has fluctuated dramatically during the pandemic, in part because of changes in demand. Early in the crisis, the price of oil was pushed below zero in a historic record-setting shift. This theoretically made shipping cheaper than ever, but it also had a broader ripple effect on shipping since oil tankers were tied up while waiting for space to unload.
Now that oil prices have returned closer to normal, oil price fluctuations have less effect on shipping. However, the broader economic ripples are still being felt. Oil-producing countries, in particular, are having trouble rebounding from the drop in prices.
How to Navigate the Turmoil
Using a freight forwarding company can help keep your goods moving even as port delays and travel restrictions cause problems. A freight forwarder maintains relationships with shipping companies worldwide and can secure you the best rate possible while keeping your goods moving frequently.
Although every crisis is different, common themes continue long after the COVID-19 pandemic is over. Unrest in various countries and political shifts in Washington, D.C. will continue to happen. The only way to keep up with the ever-shifting global landscape is to remain flexible. Freight forwarders are a key part of this flexibility since they focus on your shipments, so you can worry about your day-to-day business tasks.
Asiana USA is a world leader in freight logistics. We specialize in various Asia and Pacific routes, so you can rely on us even if your factory locations or sources change. Call us today at (855) 500-1808 to learn more about how we can serve you.
