Navigating the coronavirus and the impact on logistics

Supply chain stakeholders in the USA and China have been working around the clock to find ways to operate as normal during the coronavirus outbreak which has had a massive impact on their logistics chains.

PayCargo’s partners on both sides of the Pacific Ocean have had to rapidly access and source capacity utilising all modes of transport to ensure that deliveries are made in the fastest possible way and at the best price.

Digital solutions have been instrumental in providing quick alternatives across modes to transport shipments due to the reduction in both air and ocean capacity on the trans-Pacific trade lane.

As has been widely reported, many industries and cargo services in China have been suspended for several weeks and, although they are beginning to reopen, new issues are arising and exports to the USA from China have taken a hit.

Most prominently, the limited supply of cargo capacity has caused a drastic increase in shipping costs, particularly for air freight and have put a strain on supply chain costs.

According to online reports by JOC, at the start of February, the charter rate for a trans-Pacific freighter aircraft, which usually costs in the region of $400,000, soared to $800,000 one-way and any available cargo space is being taken for emergency medical supplies into China.

This has been exacerbated by the cancellation of passenger flights to the region which has cut belly cargo capacity, even though freighter capacity has not been reduced.

Additionally, when Chinese industry gets back up and running, there is expected to be a capacity crunch due to a backlog of export orders that are building up as industry stays closed, with some forecasts that there will be two months of shipments waiting to be shipped.

Customers are being warned about a potential logistics nightmare as businesses and shippers set about handling order backlogs, overbooked vessels, and blank sailings due to surging demand.

Prominent logistics industry leaders are predicting that the disruption will last into the middle of 2020, meaning more ongoing problems for all parts of the supply chain.

The use of multimodal digital platforms that can provide instant access to available transport and services have proven their worth. Stakeholders that have invested in the latest technology have been the most agile in reacting to the supply chain disruption.

Use of the latest platforms have given them the opportunity to quickly find available capacity for shipments, minimize disruption and do their best to meet the needs of their customers.

There are very few options available for those being reactive to any disruptions, but solutions can be found by utilising digital tools that help navigate supply chain challenges.