Freight forwarding in the age of COVID-19

[caption id="attachment_65020" align="alignright" width="284"] Brandon Fried, executive director of the U.S. Airforwarders Association[/caption] Most of us have seen movies about an attack on humankind, whether from an alien invasion, a zombie apocalypse or the worldwide spread of a disease that seemingly leaves only actor Will Smith standing. We previously thought that such afflictions were the products of elaborate fictional storytelling. Unfortunately, the coronavirus crisis has shown us that pandemics are now our reality. The rapid spread of COVID-19 has made supply chains for essential products more vital than ever and, thankfully, freight forwarders are on the front lines, providing much-needed solutions to the complex logistical challenge. As of this writing, the COVID-19 scourge is not over, but rays of hope are emerging in China, where the virus first began. Manufacturing is recovering, and Chinese domestic airlines are starting to fly. Ships are beginning to depart China ports but, unfortunately, spikes in the disease have emerged in the United States, Europe, and across other continents. The U.S. is seeing the highest ever recorded unemployment claims in its history, climbing from 200,000 to over 3 million in just two weeks and reaching 26 million as of mid-April. Retail has been hard-hit, with Coresight Research estimating 15,000 U.S. stores could close forever this year, and critical industries are no longer consuming products. State, city, and national shelter-in-place orders are the norm, keeping workers in their homes and away from their jobs and, unfortunately, reducing consumer demand. Airlines, in response to lower passenger loads, have reduced flights by as much as 90%, which deprives freight forwarders of the regular belly capacity used to transport shipments. For the most part, only freighter capacity is available to transport cargo, as belly capacity equivalent to four hundred 747 freighters has been removed from the market. At the same time, demand for air cargo has spiked, due in part to the large number of canceled vessel sailings, creating a backlog in shipment capacity into the U.S. As a result, airports in China are seeing a dramatic uptick in shipments consisting of essential medical supplies, trying to make up for the lost time. In fact, during a recent weekend, eighty freighters full of cargo arrived in Chicago within just forty-eight hours, a dramatic increase from typical cargo traffic. Similar volumes continue to arrive at major gateway airports, including Los Angeles and New York. As ocean shipping from China resumes, ships arriving in the U.S. are encountering maritime port terminals closed due to insufficient available labor. Also, since many businesses are shuttered, there is a shortage of warehouse space in which to store arriving cargo, leaving recipients with no choice but to pay demurrage charges upon arrival. Having suffered a massive drop in demand for passenger flights, airlines worldwide are now offering passenger planes for cargo-only missions on a chartered or fractional basis. So far, several forwarders have contracted planeloads of essential medical supplies to fly in the bellies of these planes, in some cases strapping boxes into passenger seats for the ride. Compared to typical business before the onset of the coronavirus pandemic, the cost of shipping is higher as passenger tickets no longer cover the operational expense, but the freight keeps moving, nonetheless. As in any crisis, there are winners and losers. Companies that fly cargo aircraft are benefiting from increased demand in the wake of less belly capacity. Firms involved in delivering household goods cannot get enough workers to bring orders to isolated home consumers. Providers of hospital masks and medical personal protective equipment struggle to fill orders and, of course, let us not forget the toilet paper industry, which has likely never before seen such demand for its products. Many forwarders specialize in specific niches, and some are benefiting by arranging chartered air shipments of essential medical products or for e-commerce fulfillment. Unfortunately, though, over half of the industry continues to suffer as shippers of manufactured goods, trade show exhibits, entertainment equipment, automotive factory supplies and technology products are not sending those goods due to required lockdowns and a loss of demand from customers. In a recent Airforwarders Association poll, 60% of the members said that layoffs were imminent or had already commenced. So far, U.S. Congress has enacted — and the president has signed — four significant pieces of legislation focused on providing financial relief to small businesses, the American worker, passenger airlines, their related support industries and all-cargo carriers. Unfortunately, none contained specific provisions for the freight forwarding community or its expedited trucking partners. In the weeks ahead, our goal is to obtain badly needed financial relief for the freight forwarding community, in order to relieve some of the pressure from an industry forced to the sidelines by grounded flights and a lack of consumer demand. We remain optimistic that lawmakers will see the value of our business and its crucial role in global supply chains. We are also confident that, as in the movies, the coronavirus threat will ultimately end, and our industry and the global community as a whole will emerge stronger than ever.

Freight forwarding in the age of COVID-19

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