Coronavirus Logistics Update 20 (COVID-19)
This is our 20th update highlighting issues the Covid-19 virus is having in the world of logistics and supply chains. In general news the UK is continuing to re-open with pubs, hairdressers, cafes can re-open from the 4th July and it looks like in a few weeks you will be freely be able to travel to many countries around the world. This is despite Leicester having to go into a local lock down due to an increase in cases, and it is possible that several other cities face the same prospect in England. It may turn out that all the restrictions being lifted have to be put back in place. Worldwide the virus is still continuing to cause havoc. Brazil is very badly effected and is struggling still to get the virus under control. Despite this the country is reopening as it simply cannot afford to keep lock down running. The USA is also facing a continuing increasing number of cases. California has reversed recent openings with bars and indoor dining areas being made to close again. Cases have significantly jumped in this region over the past few days.
Returning to the world of logistics the China authorities have released figures for rail freight from China to Europe. It showed that in April alone there was an almost 50% increase on the mount of train movements compared to 2019 and May shows a similar figure. While these services have been running for almost a decade it appears that the Covid-19 crisis has finally brought them to the attention of a much wider range of supply chain planers and it is expected demand though not continuing to double once this crisis is finally over they will continue to capture freight which would have previously move by airfreight or by ocean freight.
Aircraft belly freight capacity is likely to begin to rapidly increase along certain trade routes around the world as governments lift restrictions on passenger flights, and airlines begin to reinstate services. The UK is going to announce this week all the countries from which people can return from and not have to go under go 14days quarantine. This will no doubt trigger a massive stampede as people book holidays. The virus may be as hazardous as before but the majority of people are more than willing to risk the own lives, if the alternative means delaying holidays for a few months. This does mean freight capacity will be increasing, whether this will just mean a decline in airfreight rates as the capacity bottleneck eases and there is no additionally freight to fill the capacity or manufactures will increase production to fill the additionally capacity is going to depend on how severe the expected economic downturn is going to be.
Shipping lines are still increasing container freight rates on trade lines,particularly those to North America. General rate increases (GRI’s) are ranging from 200USD per TEU to 400USD per TEU which is a considerable surcharge. This is all down to the PPE demand once again impacting on capacity and making non-PPE goods shipping costs much more expensive than in 2019. With the coronavirus still having a significant effect in the USA this is demand is not going to disappear in July.