Translogistics Blog

Coronavirus Impact on the Logistics Industry

March 12, 2020

Written By: Peter Rio

Your team at Translogistics wanted to update you on the precautions we are taking as a company regarding the Coronavirus (COVID-19) along with a quick update on how it is affecting the freight industry.  Many of you have already reached out to us asking for additional insight on the affect the virus is currently having on Global Supply Chains.
 
The health and safety of our TLI Team Members is of utmost importance while ensuring there are no disruptions in our level of service to our customers and carriers.  100% of TLI Team Members have the necessary equipment and ability to work from home with complete access and capability, should the need arise. In the past, due to weather conditions or other emergencies, we have successfully supported our customers and carriers with full teams working remote. A coronavirus quarantine situation would be no different.
 
Internally, TLI has increased environmental cleaning and travel precautions are in place as we continue to monitor updates on the situation.

TLI is hearing that it will not be until mid-March/April until Chinese manufacturing returns to full capacity, creating a peak season like rush of freight to rebuild inventory levels. Shippers inventory levels have been incrementally worked lower, as a result of the Coronavirus. We have not yet seen any cause for concern on widespread inventory shortages at the current time but, shortage headwinds are a growing concern the longer supply chain disruptions persist.

 

Ocean/Air:

  • Ports (especially the West Coast ones) are completely out of balance, due to limited inbound containers and all of the blank sailings going on right now. Blank sailings are expected to continue through March until Chinese manufacturing reaches peak production. Carriers have implemented, or have plans for, 80+ blank sailings in the Trans Pacific lanes during February/March, placing ~9% of the global container ship fleet inactive
    • This has carried over to the US Trucking Market, as LTL and Truckload carriers alike have networks that are completely out of balance
  • Air Capacity is expected to become tight upon Chinese production recovery as shipments are converted from ocean to air in an effort to speed up the supply chain and make up for lost time and low inventory levels
  • Upon production recovery in mid-March/April, we are expecting rate increases in the 10-50% range for ocean freight and 50-300% for airfreight, depending on trade lane

Domestic Transportation (Rail/IM/TL):

  • Truckload markets in California are soft as minimal freight arrives at the ports, leading to truckers introducing surcharges to make up for the revenue drag. As Chinese manufacturing returns, ocean shippers will likely shift freight from the East to the West coast to quickly reach customers, increasing demand for longhaul ground shipments
  • During the Raymond James Institutional Investor Conference, J.B. Hunt outlined their expectations for Coronavirus impacts stating that the lack of shipments landing at the ports will likely lower shippers inventory levels, resulting in a peak season like recovery to rebuild inventory in the coming months. This peak season like recovery is expected to sky rocket domestic freight rates due to significant capacity constraints, especially on lanes heavily impacted by global supply chains

Chinese Trucking:

  • The main bottleneck (aside from labor/raw material shortages) is likely Chinese truckload capacity. Travel restrictions within mainland China are a primary driver of supply chain disruptions due to trucking restrictions and driver shortages. These restrictions are being incrementally loosened as the rate of new infections within China hits its lowest point since initial outbreak.
  • Due to travel restrictions, there are requirements for one week notices before any pickups and deliveries. Transportation permit restrictions within China have been slightly loosened, but delays in the supply chain persist.

 

TLI is fully prepared to help you navigate potential shipping disruptions due to COVID-19 through our expedited domestic and international capabilities. We will continue to monitor the impact to the freight industry on your behalf.

Below is the live online tracker for the virus, which TLI has been monitoring closely as things develop. It's extremely interactive to see what is going on globally.

Live Tracker Link

Our customers, carriers, and Team Members' health, safety, and businesses are at the forefront of our concerns and we will do everything possible to deliver a best-in-class experience through the potential disruptions.


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Categories: Awareness

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For the latest insights, tips and commentary surrounding the logistics industry, look no further.  Shippers will find thoughts from the award-winning team at Translogistics covering everything related to your transportation processes and plans.  If you have a question we are readily available at insidesales@tli.email 

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