Dear Valued Customer,

Inasmuch that the global situation remains steadily improving and we are all adjusting to working in a COVID-19 environment, we wish to provide you with the latest COVID-19 development within the transportation and logistics industry. In last week’s advisory we labelled the current situation for business as unusual, and we continue to see all parties across the supply chain finding solutions to the challenges, we jointly face.

Similarly, we are seeing the first real signs of the more or less global lockdown easing up, not least in Northern Europe, but also in other countries and regions around the globe. Concrete plans for re-opening of societies are being announced on a daily basis even in some of the countries that have been affected the most i.e. Italy and Spain namely.

Below graph illustrates where many of the major countries are on the curve of recovery, as well as it describes how the global pandemic has effected the respective countries:

Source: flag icons from Vathanx, NPIs from Johns Hopkins via, NPIs from ACAPS and published by Tomas Pueyo on here.

Overall, we see that South East Asia are increasingly facing a difficult situation albeit with plans in place for how to deal with the situation. In Singapore a strict lockdown remains in effect and is expected to last for 4 more weeks and this is the case in other South East Asia countries as well. US remains heavily affected being 2-3 weeks after the curve compared to Europe. We now also see COVID-19 spreading to some of the geographies that have not been materially impacted so far i.e. Africa and this in sharp contrast to the global situation, which overall remains in an improved state with a gradual re-opening picking up speed.

Blank sailings continues to dominate within ocean freight

The new normal for ocean freight continues to be blank sailings as carriers continue to try and balance supply and demand in an effort to minimize impact from COVID-19. Data from Sea Intelligence shows: “SeaIntel said that last week, week 17, saw the peak of blank sailings on the Asia – North Europe trade with some 38% cancelled. In week 19 the Mediterranean to North America East Coast has 33% blank capacity and Asia to East Coast South America seeing a 59% capacity cut week 20.”

Despite of the weak demand carriers continue to apply a strict pricing discipline in order to keep rate levels up, evidenced by an increase of the SCFI index of from USD 725/TEU to USD 753/TEU. An additional indicator came from OOCL posting a healthy Q1 result just 0,4 % down on volumes in Q1 despite significant impact from COVID-19 especially in China, but surprisingly revenues increased by 5,5 % despite of this.

It is considered that we in these weeks are experiencing the peak in terms of blank sailings with the level of cancelled sailings expected to go down in the coming period.

Continued pressure on airfreight capacity

As commercial capacity remains extremely scarce the fight to secure space remains very hot and full freighter solutions are in high demand. At the same time PPE shipments (Personal Protective Equipment) especially from China is prioritized ahead of general cargo putting even further pressure on the general space capacity. Rate levels remain at a record high level for the same reason and this is expected to continue in the coming period as well, until significant commercial capacity returns to the market.

A number of airports in China are heavily affected by congestion issues due to high volume pressure as well as new customs procedures for PPE shipments, where screening of cargo is now required, due to a number of cases with medical equipment not being in compliance with regulatory requirements.

Sea/Air solutions continues to accelerate with transit time difference vs. regular airfreight becoming less due to pressure on full airfreight connections.

Europe road freight continues to move

The movement of goods are still permitted and flowing with only minor delays crossing closed borders around Europe giving both transport and last mile delivery in Europe stable conditions.

We are expecting some countries to open more up within the next week.

Rail keeps rolling along the silk road

Rail connections to and from Asia remain in a stable mode though a high pressure on capacity is evident as rail volumes continue to surge. It is still providing a robust and time-efficient alternative to airfreight as well as ocean freight.

Both LCL and FCL solutions are available and the trend of rail freight being an hoc product to be a product that is used in the general supply chain planning is set to continue.

For further details on specific countries and mode of transport, see our overview here.

All information in this advisory is offered to the best of our knowledge and is prone to change.