As the world transitions from near total shutdown to tentative restarting of national economies, logistics are again challenged with extreme fluctuations in capacity and demand. Here is an update our teams have been following.
Essential versus non-essential Goods
Sea freight operations generally fully functional albeit often with reduced hours and some restrictions. The main issue is the decreased operations at various ports and terminals.
Port Terminals are prioritizing the handling of essential products (namely medical and health care support goods) over non-essential goods.
Reduced Capacity matching reduced demain for Ocean shipping
Cargo is still flowing into the US and Canada and, due to cancelled routes (known as blank sailings), the rates for ocean cargo have remained relatively consistent. Ocean carriers are benefiting from lower fuel costs especially since most carriers have not reduced their fuel surcharge. Fuel surcharges always go up much faster than they go down.
Air Cargo Rates Remain High: China to US and Canada
Air Cargo remains restricted by limited capacity continued high demand for medical support equipment. Demand for personal protective equipment is causing many Chinese manufacturers to work overtime. Furthermore, there are new Chinese export requirements aimed at ensuring the quality of the medical support goods being exported.
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Some industry pundits predict continued high air rates as the resumption of passenger flights will likely trail the overall lifting of other restrictions.
Less Than Container Load LCL increasing
The use of "less than container loads" / LCL have been increasing due to the need for expedited shipping and more modest inventory. Some industry indexes have shown LCL shipping increasing by 20% to 50% over recent months.
Shipping Express All Cargo Canada from China and US from China
The demand for all cargo carriers from China has been much more than they can handle. For many, it feels like Christmas holiday season in Spring! But this has led to capacity issues, bulk outs and frustrated companies. Carriers with allocations are being careful to give priority to essential goods.