The Affects of COVID-19 within Supply Chain & Logistics in the USA

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The COVID-19 pandemic has impacted the global economy in ways unseen by many before. With some industries seeing growth, others seeing none, companies and manufacturers shuttering, and others working week-to-week, the uncertainty of all of these changes is also being felt within the ocean transportation market.

Economic Outlook and Capacity

The global impact of COVID-19 left most shippers uncertain if they would be shipping, and if so, how. Due to limited demand in Q1/Q2, carriers offset this by reducing capacity in the market for the months of June and July in order to begin recovery and balance supply with expected demand. While blank sailings have become a regular part of shipping, the extent of these came as a surprise to most. In the first six months of 2020, there were over 1,600 blank sailings. In any given week throughout the pandemic, we have seen overall market capacity reduction by nearly 15-20%.

Rates during the Pandemic

Due to the reduction in capacity, demand has surged. The industries that are seeing increased demand include items like PPE products, but also other goods such as bikes, cookware, and home construction materials. While the demand is strong, there is uncertainty as no one knows how long the current demand will last. Carriers continue to be cautious and blank sailings as planned.

For June and July, carrier rates continued to increase to all-time highs, never seen in the market before. General rate increases (GRIs) continue to drive price increases for longer periods of time, than prior to the pandemic. Rates are not fluctuating as often, mainly due to continued demand. Many carriers are able to recoup losses and see annual gains. For the foreseeable future, we will continue to see increased rate levels until the market demand decreases and market capacity increases.

Although the effects of supply chain issues during COVID-19 have been felt across the world and the outlook for the remainder of 2020 is less than favorable, companies, such as V. Alexander & Co., Inc., continue their commitment to partner with global businesses to provide leading-edge transportation, logistics, and supply chain management solutions.

 

Ryan Sachs
Works with Global Business Development at V. Alexander & Co., Inc.

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