COVID-19 Latest Updates

A Warning for Maritime Operations, Reefer Capacity Tightens, and Ocean Freight May Be Moving Faster Than Air

By May 12, 2020 No Comments

Customs 

The deadlines for importers to give comments on Section 301 tariff exclusions are approaching quickly. Public comments are open for List 1 and 2 until June 1, and List 3 comments are open until June 8. In total, these exclusions cover roughly $250 billion worth of goods from China. 

As the virus spreads, COVID-19 outbreaks are reaching U.S. Customs and Border Protection (CBP) offices. CBP reports thorough measures designed to protect employees and prevent the spread of the virus amongst their workforce, and so far, no localized outbreaks have been large enough to affect U.S. Customs processes. In their most recent count, CBP reports that 341 employees have tested positive for COVID-19, and 3 have died. 

 

Air 

In a promising development, air freight capacity and demand are creeping up week by week, and some airlines have started to redeploy parked planes. Experts at Goldman Sachs and Morgan Stanley predict the global economy has “bottomed out”, and the uptick in airfreight backs this claim and indicates that economic activity and consumer demand may increase over the coming months. Although rates for airfreight have remained relatively steady in recent weeks, an increase in monitoring for PPE exports has created bottlenecks at Shanghai’s airport, leading to a significant decline in prices in the last few days.

Ocean 

The International Maritime Organization (IMO) is calling the inability to rotate seafaring crews the biggest challenge for maritime operations during the pandemic. Thousands of sailors around the world are working beyond their contracts, exhausted, as their relief crews are barred from travel to meet them. At the same time, these replacement crews are finding themselves suddenly out of work with no knowledge of when they’ll be able to return. The IMO is urging governments across the globe to recognize seafarers as essential workers, exempting them from travel restrictions. Crew changes have been postponed on most vessels since February, and ocean cargo operations are starting to feel the strain. As crews grow more exhausted, operators warn of the dangerous errors than can be made. 

The Panama Canal is apprehensively looking to the future, noting that May’s container ship traffic through the canal will likely serve as a signal for the future of global trade. The administrator of the canal predicted last week that the fallout of the spread of COVID-19 will accelerate efforts to reduce risk by regionalizing supply chains— moving production out of China and closer to the United States. The Panama Canal Authority is exploring options to keep ship traffic high as global trends shift. Their many predictions anticipate overall reduced traffic from Asia, increased automation in manufacturing, and moves away from single-sourcing as a means to reduce supply chain risk and cost. 

 

Trucking 

As the freight market remains as unpredictable as ever, some are turning to reefer capacity as an indicator of what’s to come. Refrigerated trailer capacity has tightened recently, with tender rejection rates hitting more than 5%. Some of this spike may be explained by the time of year—now’s a big time for some U.S. harvests—but spot rates appear to be on the rise. While the relationship between reefer and dry-van cargo is usually loose, experts are watching refrigerated capacity closely. 

 

Ports 

Despite outperforming estimates for April, container volumes at the Port of Savannah are expected to plunge in May and June. The Georgia Ports Authority expects that volume could be nearly 20% lower in May and June as the overall demand from American consumers remains low during the pandemic. The total of voided sailings over those 2 months currently stands at 60 for Savannah alone.  

As the rest of the world grapples with how to respond to the COVID-19 pandemic, China – the leading exporter of medical supplies – is trying to figure out how to supply the world with the necessary equipment. Shanghai’s Pudong International Airport (PVG) is experiencing an extreme freight overload as exports of PPE, testing kits, and disinfectant products flood in. The bottleneck is so extreme that fast boat ocean freight is, in certain cases, a quicker and more reliable option for North American importers. If you want to explore your freight options, don’t hesitate to reach out to the Navegate imports team.