Logistics professionals are invisible heroes, striving to maintain business as usual in the light of the outbreak. Even though it seems that the world has stopped, it hasn’t. Supply chains have slowed down, indeed. While some are being disconnected, new ones are being assembled. COVID-19 is disrupting shipping around the U.S. and globally but is also forcing the logistics industry to adapt and change. This is the time when most businesses in the world and the U.S. are re-evaluating their strategies. For most of them, business-as-usual may prove critical. The ability to adjust to the disruption coronavirus pandemic is causing, is a test some may unfortunately fail.
Coronavirus impacts on global shipping are only now showing in full light. We can’t fully asses the impact on global shipping, as well as an impact on shipping around the U.S. without recognizing the place of the Chinese economy in the global economy. The outbreak has clearly shown the dependency on raw material coming from Chinese ports. What little has been transported to the ports and overseas, waited for weeks in quarantine. While some destination ports do not allow ships from China to come in, others are imposing strict screening actions. However, there is hardly a country in the world that can rely solely on its production capacities.
Global trade is at the heart of the supply chain and when global trade gets interrupted all links get affected. Coronavirus impacts the global shipping industry in several ways. Shipping companies are operating with reduced personnel due to self-isolation policies. Moreover, the companies report lower revenues as the demand for goods diminished which, consequently, lowered the shipping rates. Expecting record activity just before the coronavirus outbreak, Florida’s Atlantic Coast ports were enhancing facilities, for example. It will take some time before they see it pay off. The shortage of workers is taking its toll on global shipping with interruptions in transit, delays, and accumulation of cargo both at the origin and destination ports.
COVID-19 disrupting shipping around the U.S. in serious ways. But that is not all. The coronavirus outbreak is leading to the reduced spending power of citizens and, if prolonged, even bankruptcy of some companies which struggled before the pandemic. It may happen that some Florida businesses will be forced to relocate in search of more favorable market conditions. Moreover, some companies may consider pulling their business out of China or at least reducing their dependency. Also, American Airlines is one of the companies that have cut their services, suspending passenger flights and operating at minimal capacity. Airfreight has, consequently, hit its lowest capacity in recent years.
In regards to the postal services, USPS has temporarily suspended receipt and delivery of international mail to some countries. Even though some mail may take longer to arrive than usual, USPS has made sure to update clients on the current delivery times effective April 17, 2020. Other carriers operating in the States are reporting delays on their usual routes due to restrictions imposed by the government. While COVID-19 is disrupting transportation, express shipping has remained mostly uninterrupted and should be used for urgent deliveries for the time being.
Moreover, the U.S. Customs and Border Protection (CBP) is continually processing international mail, cargo and express delivery packages in accordance with strict procedures, even though the Center for Disease Control (CDC) didn’t find these shipments threatening.
The approach to shipping management during the outbreak should change. During this time of uncertainty, logistics companies respond to the COVID-19 crisis in different ways. Having in mind the impacts coronavirus outbreak has on the shipping industry, those heavily relying on it should adjust their strategies. Timely communication is vital for the mitigation of any transportation issues. The three most important tips focus on notifying:
Anticipated economic implications of the disruption in shipping are not light. The situation develops on a weekly if not daily basis and one must stay on top of things. It may be too late to act on shipping scenarios and forecasts at this moment, as we all wait to see the development of the situation. In these unpredictable times, stagnation seems to be the best-case scenario but an unlikely one.
The U.S. retail companies are by far the biggest clients to most shipping companies. At first, retailers were hit by the shutdown of manufacturing operations in China and now, by the disruption in the shipping process. The biggest issue lies in the unpredictability of the situation. The economic impact on businesses, including the shipping industry has yet to be assessed. Industries are recording losses whose full effect on the global and the U.S. economy will show once the pandemic is contained.
For the time being, delays due to limited workforce availability are causing disruptions in the supply chain. Shippers need to take into account that even though the Chinese industry is getting back on feet, it doesn’t work in full capacity. The absence of truck drivers taking goods to Chinese ports and strict screening measures imposed at the destination ports will continue to take its toll on the global and U.S. shipping industry.
Even though the shipping process has drastically slowed, it hasn’t entirely stopped. Retailers should focus on timely shipping to mitigate expected delays. Consumers, being at the end of the supply chain, may expect accumulated delays or even shortages of certain goods or materials even with the best efforts from the shippers.
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