COVID-19 Impacts Global Logistics

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COVID-19 Impacts Global Logistics

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27-May-20

COVID-19 Impacts Global Logistics

We are more than three months into the global pandemic and an unprecedented economic decline, at least in our lifetimes. John S. Connor Global Logistics is most grateful for the continued support and cooperation we have received from our treasured customers and supply chain partners. As essential workers, and with a successful implementation of our work from home business continuity plans, it has been our privilege to continue to support the supply chain requirements of most of you who have been able to maintain business operations.

However the world of logistics has been deeply impacted by the Covid 19 health crisis and the global economic impact of the pandemic. In response to both we have witnessed the reduction of ocean freight service and an even steeper decline in air freight capacity. The ocean freight limits stem from the ocean carriers canceling sailings due to cargo flow interruptions. Air freight is even worse because much of the cargo capacity is driven by passenger airlines which as you know have cancelled thousands of international flights in response to travel bans. Air freight capacity is further strained by the huge and urgent demand to move personal protective equipment and medical supplies from Asia to the rest of the world to help fight the Covid-19 virus.

What this means for shippers who still need to move products is a radical adjustment in some cases in forecasting and inventory planning. It would be wise to consider early bookings, especially for air freight from Asia where the backlogs have been significant. Additionally, while ocean freight pricing for general merchandise has risen somewhat, air freight rates from Asia to the U.S. have been increased three, four and even five times the normal pricing structures. Rates to and from other major trading partners in the EU and other locations have experienced similar volatility.

With the reduced demand the trucking industry has also seen an increase in bankruptcies and a decrease in capacity. Our observation is that all sectors of the transport industry have been working together for the most part to collaborate and maintain service levels for those supply chains still working but the challenges are significant. All sectors are performing with new constraints brought on by the need to prioritize work place safety.

This brief summary will give you some sense of the state of international logistics currently and most of you are probably experiencing some or all of it first hand. We have heard from our agents in China that factory production has been ramping up and many vessels are increasing the load factors. We hope this is the first sign of improvement. We are also starting to see some downward movement in air freight pricing. Please be assured that John S. Connor Global Logistics will continue to monitor the situation and respond to whatever logistics needs our customers require. We thank you again for your support as well as our employees who have diligently worked and made adjustments to keep your cargo moving.

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