How COVID-19 Impact Freight Shipping?

The COVID-19 outbreak has been causing a huge impact on people’s lives, families and communities. In these unprecedented times, the ability of freight shipping services to continue undisputed to transport food, energy and medical supplies across the continents will play a critical role in overcoming this pandemic.

There are a variety of reasons that prices and times of freight shipping have increased during the pandemic, including temporary shutdowns at port, worker shortages, increased demand, increased fuel cost, and general congestion. 

However, despite the devastating economic impact of Covid-19, the effect on freight shipping has been less than first feared. According to Clarksons Research, global seaborne trade volumes declined only by an estimated 3.6% in 2020, and are on course to surpass 2019 levels this year. Vaccines could push forward the global trade recovery by one year, with trade in goods already returning to pre-crisis value levels at end-2020, it said at the time.However, despite the devastating economic impact of Covid-19, the effect on freight shipping has been less than first feared. According to Clarksons Research, global seaborne trade volumes declined only by an estimated 3.6% in 2020, and are on course to surpass 2019 levels this year. Vaccines could push forward the global trade recovery by one year, with trade in goods already returning to pre-crisis value levels at end-2020, it said at the time.

·Ocean freight

Following sharp falls during the early part of the pandemic, global trade volumes have since rebounded. However, volatility in demand, constraints on capacity and the ongoing impact of Covid-19 are causing major congestion at ports and disruption to supply chains.

Total container volumes handled at Chinese ports dropped by 10.1 percent in the first months of 2020. Agility Logistics reports considerable constraints to ocean freight around the world, impacting both key exporters, like Brazil, India, and Mexico, as well as the Europe. According to DHL, weak demand will continue to affect routes between Asia and Europe, the United States, and Latin America. Consequently, additional blank sailings are expected in the coming weeks.

·Air freight

Volumes fell by 19 percent in March 2020 due to a sharp reduction in passenger flights (which carry freight as belly cargo) and the drop in manufacturing. However, as shippers and governments turn to air cargo for essential goods, air freight rates have increased—some carriers are seeing delays with increased congestion at airports. Mid-April saw an increase in capacity, as well as a recovery in volumes transported (although they are still down, year-on-year). The overall reduction in capacity is greater than the net reduction in demand, which supports higher air freight rates.

·Land freight

Unlike ocean freight and air freight, land freight has generally remained partially available globally as roads have remained in operation, except in countries under severe lockdown. Trucking capacity is strained because of additional demand for their services—especially food and medical supply transportation—under lockdown, combined with reduced employee availability (due to COVID-19-related restrictions), leading to higher rates. Other economic sectors that require land transport, such as manufacturing, are generally not at full capacity because of lockdown. As a result, spot road freight rates have fallen in some markets. Demand for rail services has grown because of higher air cargo freight rates, blank sailings, and longer transit time for trucks.

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