An overview from Red Arrow Logistics on the impacts COVID-19 is having on the world’s supply chains and domestic freight in the U.S.
The novel coronavirus, or clinically named COVID-19, is impacting the freight market and supply chains in the United States. Various commodities from many industries are being affected, such as retailers, consumer packaged goods, raw materials for products, and industrial goods. This creates a challenge for the freight industry that has only just begun. With quarantine measures changing daily, it will be a logistics juggling act to keep freight moving smoothly throughout the country over the next few months.
The Global Economy
The US economy is intrinsically tied to the global supply chain. Global freight shipments slowed considerably when the outbreak was concentrated in China, and as a result, commercial airlines cut flights due to decreased demand. As the virus continues to affect countries around the globe, declines in freight shipments will persist. Disruptions in the global supply chain will have implications both in the short-term, and the long term with companies having to rearrange their supply chains.
Supply chains in our country depend on Chinese imports. The disruption to China’s manufacturing while under lockdown for the virus has influenced many American industries such as automotive, electronics, technology, and of course healthcare. These interruptions in supplies affect U.S. manufacturers, wholesalers and distributed as delays of parts, components, and actual items will take months to level set. Container ship operators that canceled more than half their sailings to China as coronavirus-driven restrictions froze work at its ports last month are bracing for a second wave of disruption.
The COVID-19 virus will certainly cause a decline in air freight volume coming into the U.S. from countries with limited travel. This domino effect also results in delays in subsequent ground freight shipments within the country.
U.S. Freight Concerns
The coronavirus pandemic is reshaping global airfreight operations as passenger airlines ground planes and companies scramble for the capacity to keep medical supplies, industrial parts, and high-demand consumer goods moving.
Some airlines are putting passenger planes to work as freight-only aircraft, with main cabins empty and cargo holds filled with shipments. The tactic provides some revenue for carriers hit hard by plunging travel demand and may help ease freight bottlenecks caused by cascading cancellations of passenger services, which has dramatically reduced capacity for goods traveling in the bellies of planes.
Delays in air freight will have a trickle-down effect on ground transportation as flights might have to land further from the end destination and will require extra trucking. Road transportation has not yet been restricted within the U.S. meaning that trucking is still intact. The coronavirus pandemic is whipsawing the trucking industry, as retailers clamor for delivery of food and household staples while lockdowns aimed at curbing contagion shut other businesses, leaving rigs empty on the return trip. As the last few months were the slow period for domestic freight, it difficult to predict exactly what will happen now that China is re-opening.
E-commerce depends on shipping to remain viable. With many customers now shying away from brick-and-mortar shopping in favor of online shopping, some e-retailers could see an increase in demand. For example, companies like Walmart or Staples that sell home office needs and essentials will most likely be shipping more to residences as businesses have been forced to close. For those people who have self-quarantined, are elderly or immune-suppressed, e-commerce might be the only way for them to get goods for several months.
If the situation worsens and spreads to more of the country, there could be disruptions within the domestic freight market. With imports only making up a small percentage of trucking freight in the country, it has not been a major concern for the trucking industry as of yet. Sea and air freight have had more lasting effects from the outbreak. The domestic freight market will be undergoing change as the virus spreads to new regions.
In the coming weeks, there will most likely be continued disruptions in the supply chain of certain goods coming from China or parts of Europe. These countries will not be able to supply these products at expected quantities, or with delays, which will have an impact on the freight volumes in the U.S.
Medical Supplies and Equipment Shipping
As outbreaks of the virus move across the country, there will be an increased need for medical supplies such as protective masks, surgical gowns, hand sanitizer, and tests. Part of the shortage in the country currently is due to the sudden drop in imports from foreign countries, but as the United States ramps up production, how will this affect the transportation industry? The Associated Press found that hand sanitizer and swab imports dropped by 40 percent respectively and N95 masks imports declined by 55 percent. Surgical gowns, which usually come from China, were at normal levels as sourcing was shifted to China.
The U.S. has turned to other places to source these items, including repurposing domestic manufacturing companies to produce these items. The decline in imported items could be offset by domestic production as the country tries to meet the demand of hospitals around the country. This could mean an uptick in transportation needs as these supplies (and possibly ventilators) get distributed throughout the county. The retail giant Amazon, for example, announced that it will be concentrating its efforts on shipping medical supplies and household essentials in the coming weeks.
How to Navigate Shipping During the COVID-19 Outbreak
Supply chain managers, manufacturers, and retailers all want to be able to resolve transportation problems during this time. Here are a few tips that will help manage shipping:
- Check with suppliers and warehouses to monitor any changes and let you know of any major disruptions.
- Notify customers when you expect a delay due to the outbreak.
- Use express services to mitigate delays.
- Book any upcoming shipments with an available ready date to get goods moving quickly.
It is still uncertain as to how much the virus will spread throughout the United States, and how long it will take to resolve. Certain industries that are shut down or rely heavily on imports will certainly feel the impact sooner than others, and delays in transportation should be expected.
We Are All In This Together
The Red Arrow family is deeply saddened to hear the passing of our dear friend, colleague, and agent Manuel José Rosa from Rangel Logistics Solutions based in Portugal from the coronavirus. Our most sincere condolences and deepest sympathy to Manuel’s family, friends and to all Rangel staff. Rest in peace Manuel.
At Red Arrow Logistics, we provide expertise and white glove customer service with fast-growing, complex, and high-value supply chains. As the next-generation model of logistics companies, we offer tailored transportation and logistics solutions — from single shipments to complex over-dimensional and international orders.
Red Arrow offers the scale and scope of services including air, ocean, and ground transportation to meet the budget and schedule requirements of the largest and smallest companies alike. If we can be of assistance, please email us at firstname.lastname@example.org or give us a call at 425-747-7914.