COVID-19 is a pressing, prevailing concern inducing a colossal impact on the worldwide economy.
This widespread pandemic, which had outgrown, from its initial roots in China, into the global sphere, is causing rippling repercussions across several industries. It has also severely plummeted the shipping industry.
International shipping is one of the majorly hit industries amidst the unforeseeable outbreak.
Disruptions take their toll on a much broader scale than anticipated, and the shocks and obstacles for businesses are visible at all points of supply chains. Read on to know how Coronavirus has slumped the shipping industry and consequently impacted the freight charges globally.
The rapid expanse of Coronavirus is severely injuring the global shipping markets, with the depreciation in demand for goods from China, thus having a ripple effect on almost everything, from container ships to oil tankers.
Consequently, this pandemic has rattled the shipping industry while the supply shock shifts to a decline in demands. While assessing its impact across the shipping channels, there has been a rampant impact on the operations, thus spawning a drop in the trade activities impacting the shipping business across the globe.
Find out the impact on shipping industry & freight charges due to COVID-19. Image Source: canva.com
As most of the activities are also operated from Chinese ports, the direct denouement of roadblocks due to the virus has incapacitated the shipping industry and also upset the freight charges. It has resulted in a severe economic scenario, ergo causing a decline in the dominant trade exports and imports business worldwide.
Moreover, the container shipping industry is moving at a small scale since most of the logistics service providers have slowed down their operations amidst the drop in the demand and supply ratio. In response, numerous ports have significantly witnessed a decrease in port calls, leaving the international shipping industry in this contagion.
The uncertainty of the COVID-19 outbreak not only is costing the shipping industry but also affecting the overall freight charge, turning the market in container shipping upside down. Several factors play in when it comes to the worldwide shipping business; however, one of these is the ocean freight charge. Even though freight charges are often dynamic and fluctuating from time to time, the reason behind the change is that this time is alien to the industry.
At some of India’s most important ports, such as JNPT and Mundra, shippers have presented new general rates. The freight shipments going to Northern Europe and Western Mediterranean from here have risen with almost 25 percent.
This increase has been a result of equipment shortage, and also reduction of vessel capacity. Air freights have also hiked up as the outbreak has ravaged the air freight capacity due to grounding of several air crafts responsible for transporting cargoes across and outside the Indian subcontinent.
Consequently, this has pushed shippers to try alternative and more costly ways to ship air freights. In a nutshell, it has become much more expensive to transport cargo by air as this pandemic outbreak has disrupted global air freight capacity by grounding so many aircraft, thus forcing shippers to undertake costly and makeshift circumventions.
Here are a few highlights of how Coronavirus has jostled and injured the shipping industry worldwide.
Impacted Trade Traffic-
China is a significant player in international trade, as it is the hub for some of the busiest and most significant shipping freight ports in the world. The Shanghai and Yangtze ports have observed a severe impact of COVID-19 upsetting the extensive shipping ventures on a large scale due to the acrimonious counteractive steps taken by the authorities.
The entry and exit of the ships have been restricted in several important ports as a quarantine measure to curb the outbreak impact. Some of the most significant trade and logistics shipping operators have halted their freight duties in the Chinese regions.
Additionally, the U.S has put a stringent constraint on the entry of containers working from the Chinese waterway since they have also declared the active monitoring of crews and ships for a distinct period. This stern quarantine measures are creating a massive hindrance for shipping activities involving operations coming to a momentary halt.
Soaring Freight Charges & Reduced Freight Capacity-
The fluctuation in ocean freight charges is driven by a supply and demand relationship like any other price perception in the global trade market. With Coronavirus upending the current shipping industry, major issues have emerged, including reduced freight capacity, blank sailings, and port omissions. These issues have been concerning space availability, so shippers are facing capacity concerns.
Furthermore, they are trying to benefit from this situation to announce the increase in the general freight charges. It has been observed that certain shippers are charging almost double the amount in freight charge. T
hey are charging more expensive freight quotes to acquire more profitable sailing revenues. Crisis in the shipping industry at times go in favor of some pivotal players in the supply chain. In this case, the ocean carriers are utilizing it in their support for the time being.
Cargo backlogs are predicted to raise obstacles and challenges for freight operators as the majority of the international cargo ships got halted during this quarantine period.
In certain circumstances, the freights are being sent back to source point due to the port congestion as several countries are shunning Chinese shipments. Hence, cargo backlogs are becoming a bigtime issue, primarily for shipping industries originating in China.
It has also been observed that logistics has become a crucial concern for tackling the situation. It is presumed to become customary once the guidelines are revised and updated by the authorities.
Freight charges are soaring amidst the COVID-19 shipping inconveniences. Image Source: canva.com
Here are a few tips for managing your shipping process better during the pandemic
- Do ensure to apprise clients in events of delays resulting from the outbreak
- Do make sure to Interface with the suppliers directly to ensure that the warehouses are available during the pervasive changes to the current situation. Even if they may not be entirely operational, most will have customer service teams to help address any queries
- It’s advisable to use express courier services to avoid delay
- Make sure that the customers are aware that there may be delays in receiving orders. Moreover, ensure to render convenient and friendly customer service so that these customers can keep track of their consignment shipment and delivery status
- As consumers, do ensure that you are planning to facilitate ocean shipping, which is more stable and effective at the moment
- Maintain a buffer for your freight charges and transit time, as that may fluctuate. It is advisable to stay prepared as the costs due to unexpected delays, or limited capacity may arise
It’s still uncertain how the shipping industry and freight charges will be influenced beyond the pandemic period.
Image Source: canva.com
As the world continues to be in the midst of the COVID-19 pandemic, the shipping industry is feeling grave repercussions as the global economy heads into a profound recession. Several ship sailings that have presently become null and void as first ports in China, and consequently across the globe have witnessed trade fall away along with innumerable workers and consumers in lockdown.
Every month, a profuse number of merchant mariners come to the end of their contracts on their ships and are required to be flown home. However, the pandemic has halted this creating so much inconvenience.
The shipping industry conduces to perform poorly when Chinese demand disappoints; however, the coronavirus outbreak has done more than damage the amount of cargo that needs to be transported. It’s also preventing many owners from making their ships commercially viable.
The demand bump fused with already-tight ocean capacity from canceled sailings has kept ocean freight charges scaling up. Shipping industry observers are reluctant to call this the start of a sustained rebound, with implications that consumer demand and spends will not come booming back any time soon.
Whatever course the recovery takes post-pandemic period, the only certainty will seemingly be the obligation to live with ambiguity and the projections along the way. As this virus continues to spread, there is almost no way to forecast the tool for long-term connotations.
However, the short-term consequences are clear: the shipping industry is getting impacted, and freight charges are shaking.
Video – Logistics
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