With the world facing its greatest crisis ever, there is not a single industry that has not been affected in some way by Covid-19. The logistics and shipping sectors are facing major challenges as they work to maintain supply chains while still protecting their key workers. With restrictions on travel and movement in effect around the globe, how is the freight forwarding industry coping with the challenges it is facing?
The Current Situation
The crisis affecting global shipping is not confined to one or two transport modes. Ocean freight, air freight, and road freight are all facing restrictions and challenges imposed by the lockdowns imposed by governments around the world.
The disruptions in supply chains, which initially only affected goods coming out of China, has now spread to every major country. The panic buying and hoarding of many goods is also adding additional pressure to the demands on the logistics and freight forwarding sectors. While air freight is perhaps the most severely affected as many airlines completely close operation, the effects are being felt in other modes too.
While some cargo-only flights are still operating, large percentages of goods were carried on passenger flights and it is companies who used this method who are suffering most. In the U.S., an estimated 85% of air freight capacity has been lost because of this.
Logistics professionals are seeing many journeys taking twice as long as normal as they look to reroute through still open airports and then transport the goods the remaining distance by road. Freight from Europe, that would normally be flown direct to the airport closest to the receiver, is now being routed through Mexico and Canada, a solution that also means a dramatic increase in costs, with one German logistics CCO reporting that their rates had risen from 1 Euro per kilo to between 5 and 10 Euros per kilo. Many companies which normally used air freight are looking to sea freight as an alternative.
Road freight is also facing many challenges. Both in Europe and the U.S., many drivers are reluctant to deliver to or collect from areas with high infection and mortality rates. And in both regions, drivers are also facing difficulties in accessing services such as rest stops, showers, and food.
Cargo rates are also rising for road transportation as companies offset the extra risk payments they are having to make to drivers. For road transportation companies, an added problem is that there is a lack of return cargo. Whereas before, many trucks would take a cargo to a particular destination then collect another cargo to bring back to their point of origin, with manufacturing closing down in many sectors, this has been reduced.
Journey times have also slowed down in Europe, something we will likely see in the U.S. soon too as more stringent health and other checks happen at state borders as they have between countries in the U.S.A.
Sea freight is also facing major issues. Shipping companies are facing major shortages in the numbers of containers, with Europe and the U.S. short as many as several tens of thousand. Much of this has been due to the ripple effect from China’s shutdown.
Ports have been refusing entry to some ships and many seafarers are stranded aboard their ship as countries close down travel and entry options. Add in the fact that some ports are imposing 14 day quarantines on vessels and their crews, and this vastly increases turnaround times and further impacts global supply chains.
The logistics industry has never faced challenges like it does today. Even the largest freight shipping and freight forwarding companies are now working round the clock to find solutions to keep global supply chains intact.
If restrictions on movement, quarantining of ships, and reductions in air freight continue, then the situation may get worse. There will come a point where there are simply not enough seafarers to man the cargo ships needed to keep supply chains open. Given that more than 90% of the world’s trade is transported by sea, this could have a major impact on what end users see on the shelves of their local supermarkets.
Long Beach Port in California has seen their cargo levels more than halve since the outbreak began in China and that is being echoed by major ports around the world. Any company that provides logistic services is now having to look at alternative routes, often much longer and with more than one transport mode having to be included in the shipping process.
Ports on the west coast of the U.S. are feeling the pinch first as journeys to east coast ports can take 40 to 45 days longer. And while manufacturing and exports are beginning to ramp up again in China, the impacts of the virus on western countries means that demand for non-essential goods and raw materials is falling there.
In order to keep the supply chain stable, there has to be unified planning between governments, transportation and logistics companies, and all other relevant parties. While no one can predict exactly how long the virus will last, it will take many months for the various industries and sectors to recover.
But for now, it is essential that a steady flow of food, essential raw materials, medical supplies, and some other goods is maintained. With lockdowns expanding in the west, we are part of the solution to keeping our country’s citizens supplied with their food and medical needs.
As one of the world’s leading logistics companies, Asiana USA continues to monitor the situation and to communicate with our staff around the world and also all our industry partners. Our services include freight forwarding by sea and air. Contact us by calling (855)-500-1808 for information on how we can help you.