For all of you working from home, or looking for ways to fill the time while practicing social distancing, what follows is an extended version of the Freightos weekly update.
The coronavirus outbreak continues to be profoundly disruptive to the global supply chain, especially as the US and many European countries are now battling to stopping the COVID-19 (coronavirus) spreading.
Read: Is Your Global Supply Chain Prepared for the Coronavirus?
For the latest developments and expert advice on how to manage freight during the crisis, visit the Freightos.com marketplace updates page.
Here are the latest China-US container rates, which are heavily impacted by the ongoing developments:
On the air cargo front, recent fluctuations, driven by supply changes and travel restrictions, represent a pivotal moment for real-time air cargo pricing and capacity. For more information, click here.
The previous weeks have had the industry focused on Chinese supply as manufacturing slowly recovered across the country.
But as the outbreak spreads and the US and Europe struggle to respond, disruptions to western logistics to receive those goods in the near-term and the possible collapse of global demand is a new concern.
Read: Supply Chain Recovery in Coronavirus Times
As China’s manufacturing is kicking back into high gear, many US shippers who were looking for sourcing alternatives are focusing on China again. Freightos.com marketplace shippers searching for freight bookings out of South East Asia are once again looking at options from China nearly 92% of the time, after an 8% drop at the height of the Chinese shut down five weeks ago.
And with this interest, freight rates have started their long-anticipated response. China-US West Coast container rates climbed 12% since last week, and are higher year-over-year for the first time since June 2019. As carriers announced additional GRIs for mid-April, it is likely that rates will continue to rise as backlogged orders are cleared over the coming weeks.
Air cargo rates out of China are also spiking – a trend exacerbated by the removal of most of the belly capacity that normally travels with passenger flights. Some forwarders selling on the Freightos.com marketplace reported increases in prices of 40% over the last weeks, with some reporting more than 100% increases in the last few days.
But as Chinese manufacturing and logistics rebound, the spread of COVID-19 in the west is impacting shipping in new and rapidly changing ways.
US Air Cargo
The recent US travel ban on much of Europe has decimated the major airlines. More than 60% of air cargo between Europe and the US generally ships on passenger flights, so as flights are canceled air cargo rates are spiking. Some Freightos.com marketplace forwarders are reporting increases as high as 300%, as shippers compete to get on the freighter cargo jets that are still permitted to fly.
Charter rates are surging too, leading many airlines to consider using passenger jets for cargo-only flights. This pivot is not as easy as it sounds, according to WebCargo VP Camilo Garcia Cervera. He also reports a spike in forwarders looking for real-time rate and capacity information on WebCargo’s eBooking platform, as digital tools are proving the most resilient during this fast-changing crisis.
US Trucking
Air cargo that does make it to US hubs may experience delays, as the available flights may land further from and with fewer air connections to the destination than usual. Some shipments may have to be trucked instead, with some shippers exploring air options to Mexico or Canada followed by trucking to the US.
But trucking was one of the hardest-hit links in the Chinese supply chain, with trucking rates in reeling Italy already on the rise. Road transportation is so far largely intact in the US. But New Jersey has just introduced some road restrictions impacting trucking, and if the situation worsens more disruptions could be on the way.
Labor and Demand
With much of northern California already sheltering in place, some factories already limiting their workforce, and many other industries working from home, it could be only a matter of time until the US economy shuts down nearly completely.
For logistics, the impact of a shutdown could be felt not only in terms of ports not able to handle the expected surge in shipments arriving from China but also in dropping US demand for imports, once again sending ripples through the supply chain, this time toward the east.
Coronavirus Supply Chain Updates (Google)
Related Article: Is Your Global Supply Chain Prepared for the Coronavirus?
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