Coronavirus Logistics Update 18 (COVID-19)
Welcome to our 18th update on the impact the Coronavirus is having on the logistics and supply chain sector. In non related logistics news, the UK number of reported deaths and cases has continued to fall. In the UK from Monday most shops which were classed as non-essential and so have been shut since the start of the lock down are being allowed to re-open but have to ensure their customers maintain the 2m distance rule. Other countries within the EU have continued to lift restrictions, several now allowing unrestricted travel between other EU states, with Greece allowing travellers from certain countries worldwide such as Japan in. Countries which are heavily reliant on tourism are desperately hopping that they can still salvage part of this years tourist season. Further afield India is still struggling to manage to contain the virus with cases still increasing. Places like Mumbai have been badly effected with higher rates than national average. It is hoping that increased testing and tracking will bring the virus under control. India cannot afford to have a further lock down so has to explore other ways of eliminating the virus.
Logistics is continuing at the moment to show increases in some sectors. China has released data that in May over 7 billion parcels where delivered representing over a 40% increase in deliveries compared to the previous year. Courier traffic in the UK is the one area which has shown a massive increase over the past three months. Last month alone courier traffic was up by almost 45% compared to the previous year. Supply chains dealing with products for home consumers have been busy in this period than the in the traditionally run up to Christmas. Most companies who had an online presence showed an up tick in sales, the biggest limiting factor has been the ability to get new stock in. It has been reported by several buyers that they are no longer able to source for certain factories in China as they have not re-opened. This has meant searching for potential new suppliers and then trying to get them integrated into new supply chains as quickly as possible. Buyers are finding suppliers have been cutting corners and skipping proper quality checks on products in order to try and catch up with the back log of orders. Those buyers which had already built proper independent quality checks into their supply chains have benefited in knowing the products being shipped out will be suitable for sale.
Ocean freight demand has remain fairly static over the past week, with still large demand for container space out of China which is helping to keep rates up, along with the reduction in capacity due to blank sailings by most of the shipping lines. Worldwide reductions in capacity for container traffic in June are expected across all trade routes and with a couple of exceptions some European trade routes all others worldwide trade routes are expected to have no changes in shipping rates or increase have slight increases. One charge which is appearing more and more from shipping lines on certain trade routes is an “Equipment imbalance charge” which has been added to cover the cost of re-positioning empty containers where demand has dropped off for shipments to that location.
Airfreight rates have continued to drop slightly, however demand is still high and while many airlines are now using passenger planes as cargo carriers the lack of belly freight is still a big issue. According to IATA is still expecting a bleak future for some airlines, but does see the increased airfreight demand to hold into 2021, with many industries using airfreight to meet sudden demands for certain goods and to control the amount of stock they need to hold if the world does enter a full recession towards the end of 2020.
AJF is here if you are a shipper or importer into the UK. Wether it is normally goods or PPE equipment have a variety of routings and costings available. Use our contact for to send us details an we will see how we can help.