Customer Advisory Covid-19: Brace for a bumpy few months
April 17th 2020
Dear Valued Customer,
We continue to keep our clients’ supply chains moving, from the supply of critical Personal Protective Equipment (PPE) to front-line hospital workers to implementing warehousing solutions to accommodate emergency stockpiling of goods.
Since our updates began in Q1, an ongoing feature of the Covid-19 outbreak have been uncertainty. When combined with actions of global governments to contain the pandemic, these uncertain conditions have made business planning and supply chain management extremely challenging. The spread of Covid-19 is not only impacting shipping lanes, ports and warehouses, but also manufacturing supply and consumer demand – as countries remain in quarantine.
What we can be sure of at this point is that the situation is set to get worst, before it gets better.
Speaking to reporters on Wednesday, Prime Minister Justin Trudeau said it will be “weeks” before Canada can “seriously consider loosening the restrictions.” While the flow of goods is free from these restrictions so as not to impair supply chains, cargo capacity needs to be assessed daily as a result of flight cancellations, blank sailings and international border restrictions.
Covid-19 will leave lasting impact on the Global economy
This week, the International Monetary Fund (IMF) released their April review, which shows advanced economies to contract sharply by –6 percent in 2020 as a result of the pandemic, much worse than during the 2008–09 financial crisis. Positive growth is expected in China and India.
While there are signs that the Chinese economy is returning to normal, there are also signs that demand from other countries is in decline, as international consumer markets remain in quarantine.
Meanwhile air freight & ocean freight capacity continues to be challenging as Carriers move to ensure stable revenue in an operating environment of service cancellations and cuts. Most of the container shipping alliances for example, have cut as much as a fifth from their sailings for April/May.
Global air cargo capacity has begun to stabilise following several weeks of massive declines, but remains 35% below 2019 levels and down by double-digit percentages across all trade lanes – including falls of more than 60% from Europe to North America, Latin America and Africa – reports Lloyds Loading List.
Despite the uncertain economic and trade conditions, Trade Link remain at the forefront of supply chain challenges – from the supply of critical Personal Protective Equipment (PPE) to front-line hospital workers to implementing warehousing solutions to accommodate emergency stockpiling of goods.
We are preparing for a new normal
As we continue to monitor developments of the Covid-19 pandemic we are assessing our business continuity plans across our global network and taking additional measures to ensure the continuity of service to our customers.
Our business continuity plan is built around four core pillars:
- Staying close to our customers – working closely with clients, to understand their changing needs and requirements while maintaining consistent communications via telephone, MyTradelink customer portal and digital media channels.
- Keeping our people safe – supporting our global teams to work remotely and ensuring their work environment adheres to local health and safety guidelines and protocols.
- Staying connected and informed – closely monitoring all media and global reports to gather facts and insights on the current Covid-19 situation to support customer planning and decision making.
- Preparing for the new normal – recognising the logistics environment will be very different post Covid-19 and the impacts of digital technology in supply chain operations and how our services will be delivered.
As we navigate through and emerge from the crisis, we believe Covid-19 will push businesses and logistics companies to fundamentally operate in new ways. The Covid-19 pandemic is rapidly accelerating the adoption of digital technologies and will inevitably result in news ways of working across customers, suppliers, partners and carrier ecosystems. Trade Link are currently piloting cloud technology solutions for domestic and international transportation operations, as well as reviewing our internal systems and processes to achieve more intelligent, resilient operations post Covid-19.
In close cooperation with our global partners, colleagues and carriers, we are proactively working on strategies to keep our customer supply chains moving and strengthen operations in preparation for future supply chain demands.
Right now, our primary focus is to support our customers and ensure continuity of service across our regions. We would like to update you on general market conditions and the status of Trade Link’s operations in key regions.
Trade Link Regional Updates:
Canada / US
Our operations in Canada and elsewhere continue to operate despite the challenges and evolving situation. Our telephone lines are working as normal and remain the same, as are our email and online shipment tracking systems.
The Canada-U.S. border remains closed to all non-essential travel. Truck drivers crossing the Canadian border must wear a non-medical mask or face covering under a new rule aimed at curbing the spread of Covid-19.
Meanwhile, Air Canada is expanding its cargo capacity during the Covid-19 crisis by removing seats from the passenger cabins of three 777-300ERs. Three aircraft will receive the temporary conversion with the first two already being deployed to cities in Asia.
US and Canadian seaports continue with protocols to ensure the health, safety and well-being of employees while maintaining the essential functions of the Port.
With significant capacity reductions in air and ocean and we are working closely with our partners and carriers to mitigate supply chain impacts and implement contingency solutions.
China is back to nearly full production activity – with Wuhan reopened on April 8. However, market demand for its products has been greatly reduced as export markets in Europe and US remain in quarantine. US imports from Asia plunged in March, and analysts are projecting double-digit percentage declines in total import volumes through at least August.
Air freight rates from Shanghai to Europe and the US surged again last week as capacity on the trade lanes remained tight according to the latest TAC Index.
“We continue to observe air freight prices rise and many of the carriers have not got available space or they can’t be sure when the space will open. We’ve seen rates of over US$10/kg from China to Europe” – says Edna Carr, Trade Link’s VP of Sales.
Trade Link continue to work closely with our local China teams and carrier partners to monitor and mitigate capacity and price impacts. Options include a Charter service, routing Qingdao, China (TAO), Inchon, Korea (ICN) to Toronto, Canada (YYZ) with service frequency, Tuesday, Wednesday, Thursday, Friday, Saturday and transit time around 5-7 days.
Chinese ports have resumed sailings in April, but many ports serving key consumer markets are still operating well below capacity. Faced with the rippling disruptions to supply and demand around the globe, shipping firms have been scaling back operations. Blanked sailings announced by trans-Pacific carriers demonstrate the steep decline in consumer demand while carriers are also eager to protect rate levels by controlling capacity supply.
Rail & Road
Most of the trucking services have recovered. Trucking capacity on the market remains a challenge. This trend is expected to prevail as activity resumes in China. Scheduled rail services between China and Europe are still running with the exceptions of Wuhan that is expected to resume at the end of March.
Fully operational. Intra-European transport continues to be challenging with border delays and congestion.
This week has seen announcements from some EU countries to slowly ease restrictions brought in to tackle the Covid-19 pandemic. According to reports from BBC World News.
- Germany anticipates shops under a certain size could open their doors next week and schools will gradually start to reopen from 4 May
- Denmark has reopened schools and nurseries for children up to the age of 11
- Construction and manufacturing work is back under way in Spain
- Thousands of smaller shops in Austria reopened on Tuesday, and the country will allow outdoor sport such as tennis, golf and athletics from 1 May
- Some regions in Italy have reopened bookshops and children’s clothing stores
- France, however, has extended its lockdown measures for four more weeks until 11 May.
- Belgium will maintain its restrictions until at least 3 May.
Airfreight to/from Europe remains challenging, with the majority of carriers cutting capacity. Europe/USA belly capacity has dropped by more than 80%. Alternative transport plan based on charters and freighters solutions are being implemented across the industry to ensure continuity of service.
European ports and rail are operating with minimal congestion. Only time will tell whether the EU strategy to ease restrictions is certain markets will contribute to an increase in trade activity and freight capacity. Trade Link’s European operations continue to operate as normal despite the challenges and evolving situation.
We will continue to provide updates as the situation unfolds. If you have any question, please contact your Trade Link contact, or send an e-mail to: firstname.lastname@example.org
Thank you for your continued support,