Leon Sakkal - The SPL Group

The Ripple Effect of Covid-19 on the Shipping Industry

Leon Sakkal — Tue, 14 Apr 2020 19:41:50 +0000

Covid-19 and its Ripple Effect on Everything #Shipping

Leon Sakkal

Marketing, The SPL Group

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The rapid spread of coronavirus has had a major impact on global shipping markets, with the slump in demand for goods from China having a ripple effect on everything from container ships to oil tankers.
Initially, everyone thought that it was China’s problem. Well – nobody thinks that anymore! The first country to be hit by Covid-19 (China, duh.) is now the only one with a recovering economy and re-emerging population. For the rest of the world, uncertainty is the only certainty.

The soon-to-be global pandemic began in late December with only a dozen cases in Wuhan, China. The coronavirus outbreak has now tightened its grip on the entire world, with Europe as its current epicenter. As of the 2nd April it has now infected almost 900,000 people and claimed nearly 50,000 lives.

With Western countries now enforcing nationwide lockdowns that could last for months if not years, world economies are in danger of bleeding out. Numerous industries are at a standstill and the shipping sector is navigating uncharted waters.

Over the past two months, Ship Technology Global has been speaking to analysts and experts – both directly and indirectly – to offer a comprehensive view of how the global pandemic is affecting the logistics industry.
Prosperity within the #shippingsector has long been strongly tied to China, a major trade partner for several countries and a key leader in shipbuilding. Throughout January, during which the virus started spreading across the rest of the country and to its neighbors, the industry seemed to experience only a marginal impact – initially witnessing only a minor fall in demand as ports in China and nearby countries started operating at limited capacity.

The situation largely deteriorated as January passed by and the CNY holidays were extended. After a passenger tested positive for Covid-19 onboard a Princess Cruises ship off the coast of Japan, ports started limiting – and eventually banning – cruise traffic at their terminals.
From the very beginning, these initiatives caused significant setbacks for both the cruise and shipping sectors, which found themselves dealing with orders and trips cancellations, spikes in costs and a drop in trade opportunities. In addition, Chinese shipping was hit by a nationwide ban on all non-essential travel, a largely reduced workforce and the closure of production and shipbuilding facilities.

According to figures from Chinese think-tank the Shanghai International Shipping Institute, this led to reduced capacity utilization – which fell between 20% and 50% at the biggest Chinese ports – and a sharp increase in the use of port storage facilities.

Though things may seem grim, let’s have a look at the importance of keeping the economy going.

As the world enters the fourth month of the coronavirus pandemic, recovery could be in the cards for the container sector, with the weekly number of large container ship journeys originating in China now going back up.
Although undoubtedly positive news, this trend is already slowing down as the pandemic takes over India and its neighbors – Bangladesh and Pakistan, which own some of the largest demolition yards in the world.
While it’s almost impossible to make short-term forecasts for the shipping sector once the pandemic has slowed, the post-coronavirus years will undoubtedly be all about digital disruption.

Demand has dropped across the board, including at ports. The trucking industry, the shipping industry – almost anywhere you look Covid-19 has slapped us all in the face, and what’s coming seems to be even more disruption; in different forms.
But disruptive doesn’t necessarily mean damaging, as the crisis could become a key catalyst for digital and technological advancements in the shipping industry.
Change in these regards could be threefold. The first step will be increasing investment in freight technologies as well as companies providing data analysis, artificial intelligence software and overall end-to-end supply chain management. This will be key as it reduces the shock, increases the resilience, [providing] more data, more information, greater ability to manage inventories to track the rates and timing of the shipping that is done.

Increased investment in these segments will be accompanied by growth in the autonomous transportation sector, paving the way for autonomous shipping. The nature of autonomous activities is one that can solve many problems, and deal with resilience in the core.
These will likely translate into the further evolution of e-commerce into a largely tech-savvy industry with cargo drones, 3D printers and robotics at its disposal. Covid-19 will have a disruptive power across all industries, but particularly in the supply chain and in the transportation sector. And it won’t just be in the short term.

Let’s try to keep positive, and remember! #WereAllInThisTogether

The post The Ripple Effect of Covid-19 on the Shipping Industry first appeared on The SPL Group.

The post The Ripple Effect of Covid-19 on the Shipping Industry appeared first on The SPL Group.

In Times of Chaos, the American Logistics Industry Steps Up!

Leon Sakkal — Thu, 19 Mar 2020 19:16:49 +0000

In Times of Chaos, The American Logistics Industry Steps Up!

Leon Sakkal

Marketing, SPL Group

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Whether it was the NBA suspending its season, Tom Hanks being diagnosed with the Corona Virus, or Donald Trump’s March 11 primetime address to the nation, the reality seemed to set in for everyone last week.

Indeed, the world seems to have been thrown into turmoil. With a bear market in equities, an all-out price war in oil, and the possibility of a global recession, it is more important than ever to manage risk. But, the logistics professionals, shippers, warehouse operators, dispatchers, brokers, and most importantly, truck drivers have stepped up to provide an orchestrated effort to ensure the safety and wellbeing of our country.

If you have been crushed by the freight rate volatility, consider having the shipping experts at The SPL Group manage your logistics.

This week, the heroic efforts of the American trucking and logistics industry should be obvious to anyone that has seen the empty shelves at their local market – only to come back the next day and find them filled again.

We at The SPL Group, have been taking the spread of COVID-19 very seriously, monitoring its impact on cargo flows, and analyzing economic data throughout Asia, the Middle East, Europe, and the United States. For us, this is a labor of love. We are logistics professionals, and take great pride in the efforts of our industry right now. Notice how the freight industry is the always-responder; involved in relief, recovery, and replenishment efforts throughout natural disasters, weather emergencies, and now the Coronavirus Pandemic.

We urge all of our clients and readers to take precautionary measures over the next few weeks. While exercising caution, The SPL Group will continue to stay true to our mission of providing the latest information and context about the market, shipping trends, and of course, the impact of COVID-19 on the global Shipping Industry. We recognize that with the new work-from-home environments taking hold across the industry, logistics professionals are going to want to be engaged and informed. Follow us for the latest updates.

Learn how The SPL Group can help you navigate through this difficult time. We can help you lock in rates that will not hike in a black swan event.

Of course, our team is always looking for interesting stories to tell and would love to get your perspective! Feel free to reach out and share stories of things unfolding on the ground, good or bad. Hopefully, over the next few months, we will get to write many accounts of the triumph made by the logistics and supply-chain industry of America, and across the world.

The SPL Group now offers Corporate Management. Have a senior SPL representative manage your shipping & logistics. We know shipping!

The post In Times of Chaos, the American Logistics Industry Steps Up! first appeared on The SPL Group.

The post In Times of Chaos, the American Logistics Industry Steps Up! appeared first on The SPL Group.

How is the Coronavirus Affecting Shipping?

Leon Sakkal — Thu, 12 Mar 2020 10:45:04 +0000

How is the Coronavirus Affecting Shipping?

Leon Sakkal

Marketing, SPL Group

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Shipping is the life blood of the global economy and without it, the bulk transport of raw materials and the import/export of affordable food and manufactured goods would simply not be possible. But, since the Coronavirus outbreak, the shipping industry has been rocked to say the least. As a result, Global trade suffers terribly.With a reduced Chinese labor force, Global trade has been shaken to its core these past few weeks.

Here is what we know:

Several airlines – including American, United, British Airways, and others – have suspended all service to and from China. Others are reducing flights to China by up to 50% through March.

Learn how The SPL Group can help you navigate through this difficult time. We can help you lock in rates that will not hike in a black swan event.

Unfortunately, further suspensions of scheduled flights are expected as the Coronavirus continues to run its course. The supply contraction will likely cause unpredictable rates, reduced air freight capacity, and delays. This alone will likely the prices of air freight.

Global Mail Slowdown

The USPS (United States Postal Service) has informed its counterparts in other countries that it is “experiencing significant difficulties” getting letters, parcels, and express mail items to China and Hong Kong due to a lack of flights to these areas. As a result, the USPS will no longer accept transit mail to these regions.

Ships in Quarantine

Unlike air freight, ocean freight is usually independent of passenger traffic and accounts for most supply chain shipments.

It’s true. Most of the world’s goods are shipped by sea, but the marine shipping industry is set to take a hit, with more countries likely to put stringent measures in place. Countries such as Singapore and Australia have refused to allow any ship that’s been at a Chinese port in the preceding two weeks into their ports.

The Chines Ports themselves are back to normal activity levels, as workers move cargo that was set to be shipped after the Lunar New Year. However, they could be idled again if there are continued supply chain disruptions or reduced demand.

To date, over 100 transpacific ships to North America have been canceled between February and April. And with the threat of Coronavirus reaching the United States, US ports are expecting a 20% drop in cargo.

They do, however, expect to recover in several weeks.

US Customs

US Customs is not planning to hold air or ocean shipments from China due to the Coronavirus. This applies to both courier and postal shipments. So, if you’ve got shipments en route from China, you shouldn’t experience delays at US Customs.

Shipping Management Tips

While so many of us relying on international shipments are frenzied by this mess, it is important to take the time to communicate with anyone that may be affected by any issues you face. Especially your buyers and/or customers. Here are a few tips for managing your shipping during this period:

The SPL Group now offers Corporate Management. Have a senior SPL representative manage your shipping & logistics.
We know shipping!

Be sure to notify clients in case of delays due to the outbreak, especially if you are waiting on production in China.

Communicate directly with your suppliers and warehouses to stay on top of any changes to the current situation – even if they’re not fully operational, most will have customer service teams to assist with your queries.

Use express courier services if you want to avoid delays.

And remember, the shipping experts at The SPL Group are helping thousands of businesses cut their shipping spend by up to 70% – we can help your business too!

The post How is the Coronavirus Affecting Shipping? first appeared on The SPL Group.

The post How is the Coronavirus Affecting Shipping? appeared first on The SPL Group.