Coronavirus Crisis – Easing Restrictions Lifts Demand

Coronavirus Crisis – Easing Restrictions Lifts Demand
May 15, 2020 Hannah Marshallsay
coronavirus crisis update

Businesses in Europe and the UK are being offered a glimmer of hope as restrictions begin to ease. The subsequent demand on shipments out of Asia adds more pressure to reduced available capacity.

Many countries the world over continue to be impacted by the COVID-19 pandemic and disruption to supply chains remains. However the beginnings of the reopening of many countries in Europe, including the UK, is creating some optimistic signs of recovery in trade. This has resulted in a greater demand on shipments from China than we’ve seen for some time, which is further squeezing capacity. 

Sea Freight Summary

We are beginning to see growth once more in shipping volumes out of Asia as European countries slowly and cautiously lift lock down restrictions. In the last few weeks we have seen the re-opening of many countries in Europe, the UK as well as some states in the US. The new higher demand in those countries on shipments has added further pressure to available space. 

We expect that volumes will continue to pick up for cargo destined to Europe, UK and the US in the next few weeks as there is more positive news surrounding Covid-19 and the gradual reopening of economies. Space saturation has been very tight over the last week and we expect this to continue until more capacity is put into the market. We anticipate that the volume of blank sailings will remain reasonably high, and subsequent pressure on space, to continue.

Air Freight Summary

Air freight rates and demand from China for air imports into Europe and the US are still at a high level. The rush for PPE from China by governments around the world continues to take up most of the reduced available capacity in the market, but we are now beginning to see other goods coming in. There are some early signs that rates are now beginning to stabilise after weeks of rising to unprecedented levels as more belly capacity comes into the market. 

While the market appears to be flattening, there remain challenges in the industry and unanswered questions about how long it will be until passenger flights resume again. It is still extremely uncertain what passenger demand will look like over the coming months, and given that half of shipments are carried in the bellies of passenger planes, this has huge implications for the market. 

Global Impact Summary

This is the latest summary of the current situation in the key affected areas of the world, and impact to the supply chain, resulting from COVID-19.

Asia

While China is now operating with 100% capacity, the Labour Day holiday has created a short and temporary backlog. Production outside China is only beginning to resume normal operations as lockdowns are lifted throughout May. We anticipate that it will take a number of weeks for disruptions to the supply chains in other Asian countries to fully subside. We are still seeing a number of countries operating at a reduced level and delays occurring at ports catching up on the movement of cargo.

As air freight and sea freight shipments face significant capacity issues demand has grown for China-Europe rail freight capacity. The China rail service offers transit times savings compared with ocean freight. The addition of blank sailings is making the rail option even more attractive.

Europe

As we have previously reported European road freight is being impacted mildly with some disruption to international haulage operations. At the border crossings, the delivery of goods is being delayed in some cases due to extra checks. 

US

Demand has begun to rise in the last few weeks as some US states ease restrictions. Imports to major US ports are predicted to remain below normal levels through the coming weeks, but we are expecting the market to see signs of growth once again. Ocean carriers serving the transpacific trade lane are maintaining some blank sailings to match those they have voided on the Asia-Europe route. 

UK

All UK container terminals are operating business as usual and are taking measures to ensure that they remain fully operational. 

There have been more recent concerns about the potential for congestion at UK ports as a result of cargo being uncollected. The fall in demand, store closures and limited warehousing operations, has the potential for containers to be left uncollected at ports. UK ports are generally not suffering any major delays, terminals are not congested and on-dock and off-dock storage space is available.

Our transport distribution service across the country is operating as normal.

PFE continues to operate in the UK with a skeleton staff in the warehouse and the office and all other members of the PFE team working remotely. We are taking steps to prepare for the phased reintroduction of staff back to our offices as and when the government deems it safe to do so. We will provide a further update on how PFE operations will resume in the ‘new normal’ in due course.

We would like to thank all of our customers once again for their support during this challenging period.

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