Toronto, April 28, 2020
As the Coronavirus (COVID-19) outbreak continues to evolve, Universal Logistics is doing everything we can to support our clients and to keep you informed of the ever changing business environment and how it is impacting our industry.
The following information has been gathered by mode of transport from news sources as of Tuesday, April 28, 2020:
COVID-19 – Universal Logistics Fully Operational
Further to the recent Canadian and U.S. government announcements regarding non-essential business closures, supply chain support services (transportation/distribution/logistics) have been declared essential services/businesses in the Canadian Provinces and U.S. States where we operate our own offices (Ontario, Quebec, New York and Ohio). As such, Universal Logistics Canada and Universal Logistics USA will continue to be in full operation.
China Crackdown on Shoddy PPE Exports Pushing Air Cargo Rates Even Higher (Ciffa, April 28, 2020)
A Beijing crackdown on shoddy medical exports has led to surging air cargo costs and congestion in South China.
Following widespread complaints of defective personal protective equipment (PPE), the Chinese authorities have tightened quality controls and increased customs inspections.
“In Shanghai, customs brokers have raised rates for export clearance by up to six times, due to extra paperwork and processing time,” according to Norman Global Logistics.
The company said: “So far this is impacting the Hong Kong, Guangzhou and Shenzhen regions, but we expect it to happen in the rest of the country, as at least 90% of all medical cargo will require customs inspection.”
Canada-U.S. Border Closed to Non-Essential Travel; Trade Will Keep Moving
The closure of the Canada-U.S. border to non-essential travel has been extended to May 20, 2020. All persons seeking entry into Canada for the purpose of commerce, trade, economic services and supply chains are being processed. This travel is essential and is not to be restricted.
Non-essential travel includes, but is not limited to: tourism; recreation; shopping for non-essential goods; and/or sightseeing.
Air Freight Market Continues its Dramatic Evolution
There appears to be no end in sight for soaring air freight rates as demand for freighters rises in response to the surge in demand for Personal Protective Equipment (PPE). And there are fears, with the next Chinese holiday due from May 1-5, that prices might go even higher in the last week of April and into early May.
Freighters are flying maximum hours, and available capacity is selling out almost immediately. Most freighter carriers are sold out through May and there is little room to add additional flights. For comparison, recent data from Seabury showed that the global widebody freighter fleet is flying close to 17% more block hours than it did in January. So aircraft are going to require maintenance in the coming months which will pinch capacity ever further.
Air Canada Route Updates
In a positive sign for the airline industry, Air Canada has begun to launch new scheduled flights within North America and between North America and Europe which will add some much needed capacity to the overall market.
For a full list of Air Canada’s operating routes and route suspensions, please click here.
OCEAN UPDATES:Carriers may have hit peak capacity reductions on main trades (Lloyd’s Loading List, April 28, 2020)
Container lines have been blanking (cancelling) large numbers of sailings to cater to reduced demand, which continues to be a huge issue for cargo planning for importers and exporters alike. But new figures show the worst of the cutbacks may now be passing. The volume of capacity withdrawn from container lines’ capacity may be about to peak, according to analysis.
With some lockdown restrictions starting to lift, especially across much of Europe, there is hope in the market that there could be a boost in container freight demand, but this is likely to be a short-term rather than a more comprehensive outlook, as many importers and retail outlets are wary of a potential second-string of lockdown measures should coronavirus case numbers start to see more increases.
PORT & RAIL UPDATES:
Port and Rail systems across North America are generally reporting smooth operations, with little disruption to services. Container dwell times at the docks and truck processing times at the majority of terminals are normal.
TRUCK UPDATES:Tight capacity will drive year-end snapback in trucking markets (Freightwaves, April 28, 2020)
The “snapback” in freight markets is going to be hard and fast, driven by tighter capacity as drivers leave the current falling market, according to the chief economist of the leading third-party logistics providers’ (3PLs) trade association.
Long-time industry economist Noel Perry, now chief economist of the Transportation Intermediaries Association (TIA), advised this week that he sees a recovery in which volumes fall off sharply this quarter and into the third quarter, climb back slowly, but face a capacity crunch because of the number of trucks put “on the fence” by owners beaten down by low rates and volumes now.
And although he doesn’t see the volumes of the fourth quarter of 2019 returning for a few years, they will increase enough that he described a marketplace that “jumps up” later this year. “It usually takes us a quarter or two until we realize the need to change something, and by the time we start adding drivers, the marketplace is already tight,” he said.
“Trucks are parked and won’t be manned, so pricing should be relatively attractive once we get into late this year and next year,” Perry added. The impact from these developments, without putting a number on it, is that prices will “drop badly in 2020,” according to Perry. But he said he expected prices to move up “strongly” late this year and into next year “because they are making up the capacity pressures of two downward years.”
But looking into the future is particularly difficult this time around, he added, because “we just haven’t had a shock of this magnitude before.”
“I can tell you the industry will be surprised by the snapback,” he said. “There will be a time when there will be scrambling for trucks.”
For more information, please feel free to contact us directly.
COVID-19 Response Team
Mark Glionna, Vice President – Client Relations & Business Development
Tel. (905) 882-4880, ext. 1212 Email: email@example.com
John Leis, Director – Client Relations
Tel. (905) 882-4880, ext. 1215 Email: firstname.lastname@example.org
Paul Glionna, Vice President – Systems Development & Operations
Tel. (905) 882-4880, ext. 1220 Email: email@example.com
Chris Cartan, Director – Operations
Tel. (905) 882-4880, ext. 1237 Email: firstname.lastname@example.org
David Lychek, Manager – Ocean & Air Services
Tel. (905) 882-4880, ext. 1207 Email: email@example.com
Debbie McGuire, Manager – Freight Solutions
Tel. (905) 882-4880, ext. 1308 Email: firstname.lastname@example.org
William Sanchez, Manager – Truck Services
Tel. (905) 882-4880, ext. 1224 Email: email@example.com
Vickey Ison, Office Manager – Cleveland
Tel. (440) 360-7850, ext. 100 Email: firstname.lastname@example.org