Last updated: December 1, 2020
How coronavirus is impacting the economy and the global supply chain
With the holiday shopping season well underway, import volumes are extremely high as retailers restock inventory in anticipation of seasonal surges. This is causing delays and added costs at high traffic ports.
The rapid growth of eCommerce combined with peak shipping season are contributing to record freight rates and limited capacity this Peak Season. These conditions aren’t expected to change before the end of the year.
Finally, the race for a vaccine is heating up and its global rollout will be the next major challenge to supply chain stability.
Ocean freight and coronavirus
Volatility continues as peak season volumes are overwhelming some US ports and causing a shortage of empty containers at Asian origins. There are even reports of ships vessel bunching off the West Coast, essentially waiting for a slot to open at the port so they can drop anchor and unload merchandise.
The surge is leading to an increase in rolled containers and caused carriers to prioritize getting empty containers back to Asia quickly, instead of those containing exported goods from the US.
So, while retailers are eager to get their good onto virtual shelves before the holidays, the shipping surge isn’t only keeping rates high and causing a container crunch, it’s also contributing to surcharges, equipment charges, and premiums to guarantee space.
Air freight and coronavirus
Air rates were up in November, with prices on some China to US and European lanes 8% higher than the previous month, but these rates have stabilized.
Capacity continues to be limited as shippers grab their last chance at holiday shipping space. With space 20% lower than this time last year and peak season shipments on their way, the freight crunch being felt in ocean modes is also being felt in the air.
Trucking and coronavirus
Trucking volumes, rates, and employment have been climbing since the summer, especially out of West Coast ports.
With Peak Season at hand, parcel carriers will also add thousands of seasonal workers to manage logistics services for final leg fulfillment.
Amazon shippers and coronavirus
With a 60% annual increase in sales by third party sellers on Amazon’s marketplace, the boom in eCommerce continues.
Keeping up with door to door pricing for Amazon FBA shipping can be a hassle. Want to know what the rates are? Check out Freightos.com’s FBAX, the Amazon FBA freight index
With data from thousands of weekly pricing points from freight forwarders, we’ve developed a weekly index of freight prices including for Less than Container Load (LCL), Full Container Load (FCL), and air cargo, from major export cities in southeast Asia to the most popular Amazon fulfillment centers in the US.
Want to read up on how Amazon sellers can deal with rapidly-changing consumer demands as well as inventory challenges? Read more HERE.
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Navigating Peak Season 2020 with coronavirus
In the current situation, many importers are wondering how to manage ongoing unpredictable conditions. Despite potential delays and high freight shipping costs, there are a few steps importers can take right now:
How to navigate the current freight market:
- Compare at least a few quotes and modes to make sure you are getting the best cost and most efficient service possible.
- Buffer your freight budget and transit time for changes. Costs due to unforeseen delays or limited capacity can arise, so be prepared.
- Explore warehousing options to mitigate the effects of lowered demand and business restrictions in the US.
- Pay attention to the profitability of your goods and consider if a pivot could be worthwhile. Additionally, remember to factor in freight costs when assessing profitability.
How small or midsize importers can plan for operational success on Freightos.com:
- Understand that delays and extra charges may arise. Freight forwarders are trying their best to move goods on schedule without additional fees, but in this unstable period, delays and additional charges can occur out of forwarders’ control.
- Consider which shipping mode is best for you right now. As during non-pandemic times, ocean freight is typically far cheaper but has significant lead time. If your transit time demands it, ship by air and you’ll have confidence in the transit times.
- Book now if you can. Freightos.com is fully operational, so book orders now to get goods moving as quickly as possible.
- Ship closer to your goods’ ready date to avoid rate changes. With the current shipping climate, booking too far in advance may mean rates change before your goods are ready.
- Communicate regularly with your freight forwarder. This is more important than ever – staying in touch means you’ll have a better handle on your transit time and stay on top of any changes that may arise.
- Make sure that you have manpower to accept your goods at arrival. This will minimize delays.
How to stay informed:
- Keep up to date on the industry with our resource roundup page.
- Check out our daily FBX ocean rates index, which we are providing for free for the rest of 2020 to help you stay on top of freight rates.
As always, we at Freightos.com are here to help. Please reach out if you have any questions or concerns.