Coronavirus – Easing Restrictions Results in Spike in Demand

Coronavirus – Easing Restrictions Results in Spike in Demand
June 12, 2020 Hannah Marshallsay
coronavirus crisis update

The easing of lockdown measures across much of the Western world has seen a dramatic increase in the demand for cargo to be shipped from Asia and the Indian subcontinent in particular. Blanked vessel sailings and lower available capacity are impacting the overall situation.

After months of demand tumbling around the world, the situation is becoming more stable with the effects of the Coronavirus crisis decreasing week on week. The reopening of many retailers across much of Europe and the US, and with non essential shops opening once more in the UK next week, has resulted in a jump in demand. This has created a strong growth in demand on shipments across Asia and the Indian subcontinent, at a time when capacity is squeezed. 

Sea Freight Summary

All carriers serving shipments from Asia to Europe and the US are now operating normally but capacity on the shipping routes is down. The new higher demand from Europe, the UK and the US on shipments in recent weeks has added even further pressure to available space. The widespread removal of capacity from blank sailings and the withdrawal of services has kept freight rates high. The Shanghai Index (independent barometer for freight rates around the world) has not been higher during June in recent years as it is today. 

As social restrictions around the world begin to ease, carriers have not reactivated significantly more ships as may have been expected. Shipping lines anticipate the current spike in demand to be a temporary surge and are therefore cautious about redeploying ships too quickly. Although some blanked sailings have been reinstated on certain routes over the past few weeks, these have only served to reduce the number of cancellations rather than indicate a reversal to normal market conditions.

The restrictions in space has resulted in some delays, during what is usually a seasonally quieter time, as a number of shipments are being ‘rolled’ to a later date. We anticipate that these challenges will remain as shipping lines have announced further significant service cancellations to take effect from the third quarter. The outlook is that space saturation will continue to be very tight over the coming weeks and we expect this to continue until more capacity is put into the market. 

Air Freight Summary

Air freight rates and demand from China for air imports into Europe and the US have begun to plateau. The highly elevated rates of recent weeks have begun to descend to more normal levels as demand for PPE and facemasks cools. While the market begins to flatten, the cost of providing capacity is still significantly higher than normal. Operating passenger aircraft without passengers to carry freight increases the financial burden for airlines and only the reintroduction of passenger traffic will ease the situation.

We would like to reassure our customers that despite these challenges our services are fully operational from all destinations. The impact from factors arising from this situation may cause irregularities from time to time, but we continue to handle all of our customers’ shipments and transport, and all our staff aim to provide the best possible service despite the current challenges.

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

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