COVID-19 disrupts world-wide logistics

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COVID-19, a known world-wide health issue, has also grown into a worldwide logistical issue with every global freight company in the world experiencing disruptions to their imports and exports.

Ocean Freight

Disruptions started in late January when China‚Äôs supply chain dramatically slowed down due to their COVID-19 lockdown. As a major player, this resulted in extensive blank sailings which left virtually no empty containers at European ports. A blank sailing (also known as a void sailing) is a sailing that has been cancelled by the carrier and means a vessel is skipping one port or an entire string (a set of ports served by a carrier).

As a result, masses of empty containers are now moving between countries in an attempt to stabilise current trade imbalances. This combined with the extreme methods in place to slow the spread of COVID-19 and the delayed recovery of container demand caused by lockdowns, has Alphaliner (the worldwide reference in liner shipping) estimating that up to 60 per cent of weekly outbound capacity has been withdrawn from the Asia-Europe and trans-Pacific trades since mid-February, as well as from the intra-Asia routes. Australia is currently experience moderate constraints with a slight container or equipment shortage.
Source: Agility Insights (click here for an ocean freight country breakdown)

Air Freight

Since January, hundreds of thousands of flights have been cancelled worldwide in response to government travel restrictions and this number is only increasing. These cancellations have resulted in restricted air-freight capacity, halting global circulation, labor shortages and slow customs clearance. Currently Australia is experiencing moderate constraints through air freight seeing a 40-50% capacity reduction caused by freight cancellations.
Source: Agility Insights (click here for an air freight country breakdown)

These constraints will see Australian industries that rely on material exported from Europe continue to experience disruptions to their trade. With Germany and Italy still mostly in lock-down the most obvious impact so far has been the sharp rise in shipping costs and the delays in materials. This is expected to continue for the foreseeable future with hope that the availability of containers travelling to and from Australia may improve in the second half of April. However, the lag on effect caused by blank sailing may see a delay in worldwide logistics returning to normal for some months with some predicting normality will not return until the end of the 2020.