Surprising Benefits Of Covid-19 On The Shipping Industry

October 3, 2020

Surprising Benefits Of Covid-19 On The Shipping Industry

This logistics reference prepares and informs you of the short term and long term effects of coronavirus and shipping.

Three different areas have been influenced by the impact of Covid-19 on shipping internationally. Firstly, the immediate effects on shipping speed and processes. Secondly, a resulting recession may have a wider impact on global trade, affecting the number of imports/exports. And thirdly, the changes being planned to meet new expectations and realities

How Covid-19 messed up the logistics on the ground, in the air, and by sea

Land Freight
Despite Coronavirus, trucking has remained partially available globally. Roads are mainly in operation, except in countries under severe lockdowns. What has changed is the loads they are carrying and the increased request for delivered goods. Food and medical supplies are the main goods being transported, and trucking companies are trying to meet the demand with fewer working employees. On a domestic level, trucking has soared as consumers turn to e-commerce for grocery shopping and other daily essentials.

Ocean Freight
Container shipping has dropped significantly as the COVID-19 pandemic triggered recessions in many countries across the world. Total container volumes handled at Chinese ports dropped by 10.1 percent in the first months of 2020. Other countries with significant exports like India, Brazil, and Mexico, are also feeling the impact.

Air Freight
Global flights which include traveling passengers and air cargo, were down by 74 percent between 5 January and 18 April 2020. However, many airlines are restructuring and setting aside aircraft to transport goods only, instead of goods and passengers. This is a smart way of meeting the current demand and coming out ahead. Nevertheless, airlines are still not able to meet demand. As governments and shippers turn to air freight to transport supplies, the rates for air freight are increasing.   (World Trade Statistical Review 2020). Despite the spreading virus, and the lockdowns, global trade has continued, proving that global trade is here to stay. The biggest block to increased global trade is in the aftermath of the pandemic.

A recession will impact the volume and strength of global trade

How great the recession will be because of Coronavirus, is a game of guesses. Many are measuring PMI and studying the strength of a country’s currency. You can see the statistics here. 

W Group will not make an estimate on this, as the data is constantly changing based on the spread of the virus and updated government policies. 

Though global trade is continuing, the logistical nightmares caused by Coronavirus is prompting the industry to adjust to new realities. 

Though the first two results of Covid-19 on global trade are devastating, this third and final point brings long-awaited benefits to the industry.

3 crucial ways Coronavirus is forcing change on the industry

A. Safety precautions:
This may lead to more cargo inspections and increased shipping costs.

Understandably, the spread of Covid-19 has led to many questions and concerns. This is leading to increased security measures between different countries to prevent the spread of infectious diseases. 

Currently, Governments have placed export restrictions for sensitive goods like medical supplies, medical devices, and pharmaceutical goods. 

Eventually, shipping costs will increase because of the need for more inspections and tighter controls to help prevent the spread of diseases.

B. Speedy solutions for transport:
To keep the supply chain running smoothly, on-time deliveries are crucial.

Coronavirus has proven to US companies that having most of your suppliers in the East Asia Pacific region can lead to many problems. 

The Apple iPhone uses components from more than 200 suppliers in 43 countries. An uninterrupted supply chain helps Apple competitiveness, economic growth, and job creation. Alternatively, a disrupted supply chain would lead to financial loss.

The issue of disrupted supply chains is causing companies to consider diversifying their suppliers and finding alternate manufacturers onshore or closer to shore. The shortening of supply chains will help the goods reach the market faster.

Additionally, prompt delivery also requires using creativity when transporting goods. When transporting goods with WGroup or logistic companies that provide different freight options, sellers will have a competitive edge in the market. 

One example of how cargo options are being restructured is with air freight. 

The airline industry is jumping in to meet demand. They are allocating entire planes to service air cargo instead of just serving passengers + cargo

Not surprisingly, streamlined logistics can boost competitiveness and stimulate economic growth in new markets. Source: World Bank, LPI, 2018.

C. Transparent shipping:
Logistics is currently undergoing a tech revolution.

Companies with robust digital capabilities like WGroup, that can track cargo, provide you with an advantage.

During the COVID confusion, many customers awaiting their goods were at a loss. No one knew at which point the cargo was stuck when it would be released, what the next shipping block would be, and if the cargo would arrive with any sales opportunity left. 

Tracking shipments is no longer “an extra”. Customers have the right to know where their cargo is at every step in the journey.

When using a logistics company like WGroup, customers no longer need to pace in front of the computer, thumping out emails wondering where their cargo is and when it will be coming. 

The unknown causes chaos, confusion, and a lack of planning. Customers need to know where shipments are, what is detaining them, and how long they will be detained so that proper and responsible alternate arrangements can be made. 

We hope the overall lasting result of Covid-19 on the shipping industry will only be positive; driving technological growth and streamlining supply chains.

For global shipping with flexible options that you can track see World Logistics Group.

See more of our articles for guidance on shipping from China to the US or India to the US for during and after the Coronavirus pandemic.

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