As the impact of the coronavirus (COVID-19) on businesses and global financial markets continues to escalate, we would like to share some updates from our global network partners as well as our own Noatum Logistics North America operations.
Air Freight Market Update:
As of Monday, March 16, there are 138 countries with confirmed cases of COVID-19. Several of these countries such as the United States, Italy, Spain, Australia and China have restrictions and/or screenings in place for incoming travelers. These restrictions, coupled with the social distancing policies and travel restriction guidelines of the major businesses in these effected zones, have led to a precipitous drop in airline passenger demand, causing commercial air carriers to cancel routes, ground wide body aircraft and lay off personnel. These actions will significantly impact both import and export capacity and air freight rates. Space is available but at premium rates and without transit guarantees.
Please find the updated capacity cut summary (dated March 15) below:
Ocean Market Update:
The impact of COVID-19 and its effect on the ocean market has been spreading rapidly beyond China during the last several weeks. The most significant current impact is on space and equipment availability globally. The numerous vessel cancellations to/from China due to the extension of the Lunar New Year holiday to combat COVID-19 has resulted in less space and severe equipment shortages in all countries trading with China.
With the increase in blank and void sailings from Asia to the U.S., there has been a lack of equipment replenishment. Hardest impacted areas are the U.S. inland points, and the expectation over the next several weeks is a worsening situation as fewer containers are being delivered to inland container yards. Main seaports are expected to remain in balance, however we are anticipating container shortages in the Pacific Northwest, Oakland and Southern Florida ports.
With nearly double-digit decline in volume year over year at many of the major ports in the U.S., the various port authorities have had to adjust their operations to better align with demand. Many ports are shortening shifts or cancelling second shifts altogether. This is causing trucker congestion and delays at time of delivering or picking up containers.
General Rate Increases:
Ocean carriers have announced rate increases (GRIs) on nearly all trade lanes in reaction to the space and equipment shortages and to take advantage of the pending anticipated strong eastbound demand from China.
Noatum Logistics North American Operations Update:
As the situation around COVID-19 continues to evolve, we have been closely monitoring information provided by public health agencies such as the Centers for Disease Control and Prevention (CDC). As a result, a formal program of social distancing has been instituted effective the week of March 16 for Noatum Logistics. This program includes telecommuting, flexible schedules and physical distancing of workspaces in the offices and warehouses until further notice. All Noatum Logistics locations are open with key departmental coverage, with a focus on restricting contact and effective social distancing. We do not anticipate any delays in our communication but do ask for your understanding during these unprecedented times. Our focus remains on successfully navigating these challenging market conditions while continuing to provide the uninterrupted services our customers require. Please continue to communicate with your existing Noatum Logistics contacts.