Falvey Shippers Updates

3 Ways the Coronavirus is Affecting the Shipping Industry

Posted: Mar 18, 2020 9:01:00 AM

As the COVID-19 virus, also known as the Coronavirus, continues to spread across the world, it’s disrupting global supply chains. At the onset of the outbreak, China isolated itself, closing many of its ports, airports, and factories, which greatly impacted the shipping industry. 

Because shipping accounts for 90% of global trade, we’re seeing a ripple effect in the United States. A decrease in freight deliveries, delayed and canceled shipments, and inconsistent spot rates are just three of the many ways the virus has affected the shipping industry. 

Freight Slump

Though China is slowly working toward recovery as it reopens its factories and ports, many shipments from the country have been delayed or canceled altogether. Because of this drastic reduction, the Port of Los Angeles, the largest U.S. port for Chinese imports, is receiving far fewer shipments. Some experts are expecting cargo volumes to be down by 20 and 30% at U.S. ports, compared to last year. 

Ordinarily, these shipments would board trucks and trains for delivery throughout the U.S. But without shipments to deliver, the trucks and trains are at a standstill. Some shipping companies are turning to air freight shipments for faster delivery, but as the virus spreads, it may only be a matter of time before flights are grounded, too. 

Delayed and Canceled Shipments

Due to the backlog of these shipments, U.S. manufacturers and retailers will experience inventory shortages as their stockpiles diminish. For example, many electronics manufacturers based in the U.S. rely on suppliers in China for parts or components. With shipments delayed or canceled, they cannot assemble their products and send them to their clients. These travel restrictions are also harming production schedules for retailers, which will most likely delay the delivery of fall products. It won’t be long until consumers start noticing these shortages in stores. 

Uncertain Spot Rates

Spot rates refer to the price shippers pay freights to haul shipments. This lull in shipments is causing the spot rates to decrease, as both the Port of Los Angeles and the Port of Long Beach reported year-over-year reductions. However, some believe there is hope for an increase if there is a surge in freight deliveries as the delayed shipments arrive at the ports. But because the future of the Coronavirus outbreak is uncertain, it’s difficult to predict what will happen to trucking rates through the end of the year. 

As the virus continues to impact the shipping industry, conduct supply chain risk assessments and make sure you have contingency plans in place to best protect your cargo. 


Recent Posts