Coronavirus Crisis – Supply Chain Capacity Harder Hit

Coronavirus Crisis – Supply Chain Capacity Harder Hit
May 1, 2020 Hannah Marshallsay
coronavirus crisis update

Much of the world remains heavily impacted by the COVID-19 pandemic. Global supply chains continue to be disrupted and freight capacity is getting increasingly squeezed.

The delay and disruption to supply chains continues as the restriction of movement within populations is still the norm for much of the world. However the beginnings of the reopening of some countries in Northern Europe is creating a new demand on shipments from China, which is adding pressure on reduced available capacity. 

Sea Freight Summary

Global shipping continues to be in a period of intense disruption and flux. We previously reported that the downturn in trade in Europe and the US has resulted in shipping lines blanking large numbers of sailings to cater to reduced demand. As the pandemic has progressed, blanked sailings have increased at different rates on different routes. In the last few weeks we have seen a gradual re-opening in some of the northern European countries as a result of some European governments beginning to ease their restrictions. This has created higher demand in those countries on shipments from China and added further pressure to available space in a situation with already reduced capacity. 

We expect that cargo volumes will continue to pick up for cargo destined to Europe and the UK in the next few weeks as more countries begin to lift restrictions increasing trade once more and therefore demand for space. Space saturation has been very tight for shipments to the UK and EU over the last week and we expect this to continue until more capacity is put into the market.

We now expect the midterm outlook from Asia to be growth in container shipping volumes as more and more countries gradually lift lockdowns. We do however expect the volume of blank sailings to remain reasonably high, and subsequent pressure on space, to continue.

Air Freight Summary

Air freight rates for air imports into Europe are continuing to surge. The rush for PPE from China by governments around the world is utilising most of the reduced available capacity in the air freight market, continuing to drive up prices. Rates remain at an all-time high and this situation is expected to continue over the coming weeks due to global demand for medical equipment across all regions and countries affected.

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 business in China has started to recover again, production outside China continues to be hard hit. Measures to contain the spread of coronavirus in other Asian countries have impeded manufacturing which has caused supply chain disruption. Lockdowns in some Asian countries are expected to be lifted in May, although details are unclear at this stage. 

China

China is back to full production activity. However China is on it’s Labor Day holiday until Wednesday 6th May, meaning that factories and ports are currently closed.

China’s trading partners in Europe and the US are still not making the normal levels of purchases as consumer demand is curtailed. Shipping lines are continuing to see a decline in demand for shipments and are continuing to manage the situation with waves of blank sailings.

India

The lockdown has been extended until 3rd May intensifying the supply chain disruption in India. New guidelines will come into effect on May 4th which will provide  ‘considerable relaxations’ to people and services in many districts across the country. The details of these guidelines and therefore what the relaxations will mean for the supply chain have yet to be communicated. 

We expect the delays with cargo moving from India over the next few weeks to continue.

Bangladesh

On 25th April, the enforced nationwide holiday ended which had prevented people from leaving their homes. Hundreds of factories have since resumed operations. We are still experiencing delays at Bangladesh’s key port, Chittagong resulting from heavy congestion in its yard causing disruption to sea freight services.

Other Asian Countries

Malaysia has now lifted its lockdown from 29th April and ports are once again resuming normal operations. Albeit with delays resulting from ports catching up on the movement of cargo.

Sri Lanka has extended its lock down until May 4th. Cambodia’s lockdown has been extended until 12th May.

Myanmar, Vietnam, Pakistan and the Philippines continue to operate at a reduced level.

Europe

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 at and staff shortages. Warehouses and distribution centres across Europe are almost at full capacity, forcing consignees to identify ways to look for container storage at origin or destination.

US

Ocean carriers serving the transpacific trade lane have announced further blank sailings to match those they have voided on the Asia-Europe route. Imports to major US ports are expected to remain significantly below normal levels through the coming weeks. It is expected that demand will begin to rise as some US states ease restrictions in the coming weeks.

UK

All UK container terminals are operating business as usual and are taking measures to ensure that they remain fully operational. Operations at ports are being slightly slowed by intermittent closure for deep cleaning. 

We continue to operate our transport distribution service across the country 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 successfully working remotely. We do not anticipate any notable impact to our customers and you should be able to reach your contacts on the usual phone numbers. We are in daily contact with all of our partners worldwide and will keep you abreast of the situation in the different markets depending on individual customer’s needs.

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

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