How Coronavirus is Impacting Shipping: Air Freight, Trucking, and More

Last updated: July 9, 2020 


How coronavirus is impacting the economy and the global supply chain

Even with June US import volumes improving by an estimated 10% compared to May, they remain 6% below last year’s volumes.

While capacity is stabilizing and volumes remain lower than normal, following last week’s third consecutive GRI ocean rate increase, importers will continue paying high rates. Air volumes are likewise increasing, but remain limited.

Ocean freight and coronavirus

After hitting a two year high last week, ocean shipping rates from China to the US West Coast declined slightly, but remain 68% higher than the end of May and 72% higher than last year. 

The last time ocean rates approached this level was in November 2018 when US importers raced to beat the introduction of new tariffs on Chinese goods. But even in that peak demand situation, rates for China-US West Coast FEUs were 7% lower than they are now. 

A demand surge in June has led to fewer carrier cancellations in July, with The Alliance even restoring some Asia to Europe sailings and two China-Pacific Northwest sailings this week. 

Despite the increase in demand, June volumes will still be down 6% compared to last year. Projected flat volumes for July through October will result in double digit year on year deficits for these peak season months when volumes normally surge.

With volumes and capacity still not at equilibrium, rates remain extremely high, with reports of some carriers requesting premiums on top of these rates to prevent rolled shipments. 

As infection rates, closures, and restrictions grow in the US, these extreme freight rates may point to the urgency importers are feeling to ship as soon as possible as the pandemic has made it impossible to know how long consumers will still be buying.

Air freight and coronavirus

Air cargo volumes are increasing despite the stabilizing demand for PPE, yet supply in the airfreight market remains limited. 

While commercial cargo pushed volumes 12% higher at the end of June compared to the end of May, overall capacity is down 26% compared to last year and is not expected to recover during the second half of the year. 

Our data has China-US rates down 60% since early May, with extreme ocean rates contributing to increased air volumes as some shippers opt for air over expensive ocean. 

Trucking and coronavirus

Trucking employment increased by 23,300 jobs in June, according to the US Bureau of Labor Statistics. This indicates growing demand, however, the road to recovery will likely remain bumpy as COVID-19 related volatility persists.

Amazon shippers and coronavirus

Amazon announced that Prime Day will be pushed until September. The delay is in hopes that the economy and spending will begin recovery by then, and also gives Amazon time to get ready to handle the hoped-for Prime Day surge in orders. 

Read up on how Amazon sellers can deal with rapidly-changing consumer demands as well as inventory challenges.

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Preparing for shipping delays from China and elsewhere

The situation is unpredictable, of course, but there are a few steps you 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.
  • Try to ship by ocean when possible. Despite the challenges, airlines are flying and even augmenting cargo planes with passenger planes. That said, prices are still quite high so if your products’ lead time allows it, ocean is a good choice.
  • Plan in advance to enable ocean shipping, which is more stable and efficient right now.
  • 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. That is, some goods, such as clothing, that saw higher sales before the spread of corona, have been slumping, while others, such as certain home goods, are doing better. Consider if a pivot could be worthwhile. Additionally, remember to factor in freight costs when assessing profitability – right now it’s best if possible to avoid goods that are shipped by air, since costs are much higher than normal. 

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, and these are unfortunately 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. If your transit time demands it, ship by air and at least you’ll have confidence in the transit times. 
  • Book now if you can. Freightos.com is fully operational, so you can 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: 

  • Be sure to join Freightos.com Insiders, a community on Facebook, to connect with global importers of all sizes and share insights, tips and solutions during the spread of coronavirus.
  • 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.