{"id":16228,"date":"2020-03-20T03:41:04","date_gmt":"2020-03-20T03:41:04","guid":{"rendered":"http:\/\/www.odysseylogistics.com\/?p=16228"},"modified":"2024-01-24T22:15:27","modified_gmt":"2024-01-24T22:15:27","slug":"covid-19-supply-chain-impacts","status":"publish","type":"blog","link":"https:\/\/www.odysseylogistics.com\/blog\/covid-19-supply-chain-impacts\/","title":{"rendered":"Your supply chain during Covid-19: Preparing for Coronavirus resilience"},"content":{"rendered":"\t\t
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As shippers worldwide rush to contain the immediate impacts of the Covid-19 outbreak, they should also be keeping an eye on the future and preparing for it now.<\/h6>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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As supply chains worldwide brace for the impacts of Covid-19, companies are dealing with both the immediate and future implications of this global coronavirus outbreak. Where temporary business shutdowns, truncated store hours, and homebound employees are some of the most obvious concerns in the U.S. right now, there are also long-term, global implications to consider when planning for the future.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\u201cU.S. shippers need to prepare for a trucking price shock at some point this year as the impact of the coronavirus disease 2019 (COVID-19) ripples from Chinese factories to US distribution centers and manufacturing plants,\u201d JOC points out in\u00a0Coronavirus blurs trucking\u2019s 2020 vision<\/a>.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\u201cMany shippers, carriers, and brokers expect the truckload market to shift in 2020, with capacity tightening and rates rebounding after plummeting last year from 2018\u2019s unprecedented peaks,\u201d JOC continues. \u201cThe questions have been how swiftly will this shift take place, when will it begin, and how high will prices rebound? The impact of the coronavirus on international and domestic supply chains brings a sharp focus to those questions.\u201d<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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Preparing for the Uncertainty<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tWhile the long-term impacts of the virus on supply chains remain unclear,\u00a0FreightWaves<\/a>\u00a0says companies should make decisions today on how to adjust to this disruption. Control measures in response to the coronavirus have shuttered much of China\u2019s production for a majority of the first quarter, causing exports to plunge. Container spot rates from China to the North American West Coast are still down more than 10% year-over-year, it adds, and import shipment levels at the ports are a fraction of normal volumes.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Intermodal rail volumes eastbound from Los Angeles are down 36% since the beginning of February and are 22% lower than last year\u2019s Chinese New Year-related trough. According to Freightwaves, trucking spot rates from Los Angeles to Dallas are down 12% since Feb. 2, while rates in the opposite direction are up 24% in the same period. \u201cIn other words, the trucking spot market is pricing in softness in Los Angeles, treating it like an undesirable backhaul market instead of the abundant source of freight that it usually is,\u201d the publication reports.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\u201cConsumers are buying dry and canned foods, bottled water, paper products, and disinfectants at higher rates than normal, pushing up truckload demand across a broad swath of freight markets in the United States,\u201d Freightwaves adds. \u201cIt\u2019s unclear how long that spike will last, or whether it will be followed by a deep trough if inventories run out or quarantined people simply buy less.\u201d<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t

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Over the Sea<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\t\t\tOn the maritime front,\u00a0JOC<\/a>\u00a0says that the coronavirus outbreak has had a major impact on the usually lowest-priced intra-Asia trade lanes, which typically meet much of the equipment repositioning for the region. From JNPT\/Mundra to Shanghai, average spot rates have increased to $150 per TEU and $200 per FEU from $100 and $150, respectively, around mid-February. Rate levels have also surged on the return, to about $650 per TEU and $850 per FEU from $400 and $500 two weeks ago.\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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According to Chennai-based FreightBro, when freight demand rebounds, capacity will likely become extremely tight, which could, in turn, have an inevitable knock-on effect on freight rates. \u201cWith the head haul being impacted from China, we can estimate a dearth of empty equipment availability across the world,\u201d a company spokesperson told JOC.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\u201cThis shortage of equipment will have an impact on exports owing to the huge imbalance that is anticipated,\u201d he continued, \u201cand equipment leasing companies cannot fill in for this large-scale demand.\u201d<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\n\t\t\t\t\t\t\t\t\tDue to the standstill in China, massive build up of boxes at docks has left the U.S. and France with a shortage of containers. The\u00a0Wall Street Journal reports<\/a>, \u201ccontainer volumes from China into California\u2019s three largest seaports\u2014Los Angeles, Long Beach and Oakland\u2014were off 35.2% in February from a year ago, according to trade data research group Panjiva. The neighboring ports of Los Angeles and Long Beach, which together make up the largest U.S. gateway for imports from Asia, handled 132,564 fewer containers in February than they did the same month a year ago.\u201d Now the flood of empty returns is a major concern. Thousands of boxes piled up at those ports and at the gates ocean carriers \u201cdirect hundreds of truckers on short notice to return empty containers to a specific terminal where the vessel is being prepared for departure,\u201d Ed DeNike, president of SSA Containers shared with\u00a0JOC<\/a>. \u201cMeanwhile, other truckers are arriving with outbound loads, or showing up to take delivery of import loads, and they are caught up in the gate traffic. It floods the gate and affects all truckers.\u201d\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t
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Current Operations<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The carrier community is navigating through similar challenges, and in some cases greater challenges, as the shipping community.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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