ocean freight, Q1 2020 – Easley answers
We’ve all heard the phrase “on the slow boat to China.” While this quip is often used comedically, it can have a very literal meaning in the transportation industry. When compared to air cargo, ocean freight simply moves slower. Just as ocean freighters move slowly, so did the impact of COVID-19 on the ocean freight industry.
The industry as a whole experienced a $4 million loss for the first quarter. While that sounds like a large loss, it’s actually insignificant when compared to the first quarter declines seen with international air freight.
So, what’s the big deal? If the ocean cargo industry dodged COVID-19 in Q1, isn’t that the end of the story?
As time has revealed, the ocean freight business is in no way immune to the coronavirus. Rather, there was a significant delay before the consequences of the pandemic were felt by the industry. Where air travel allows cargo to be transported across the world overnight, ocean freighters often spend 30+ days on the water. So, the ocean cargo supply chain is much less susceptible to rapid economic drop-offs.
According to a report by The Loadstar, “Ocean carriers successfully mitigated the impact of the supply disruption of the coronavirus outbreak in China during the latter part of Q1 by an aggressive blanking strategy, involving the withdrawal of some 36% of Asia to Europe sailings and 28% of transpacific headhaul loaders during February.” But, the benefit of lagging behind COVID-19 won’t last forever. Time has already proven the second quarter to be less forgiving, and the latter half of the year looks equally dim.
Though ocean cargo volumes were not drastically affected by the pandemic in the first quarter, things caught up eventually. As supply and demand become more unsteady, more complications will arise. Stay tuned for future posts discussing ocean cargo in the second quarter and beyond.
For the original report by The Loadstar, visit https://theloadstar.com/container-shipping-could-be-facing-a-10bn-plus-loss-for-2020/