Strict health regulations designed to curb COVID-19 are changing the way consumers shop. These changes are impacting the shipping industry in a number of different ways.
Ocean Shipping
NRF Vice President Jonathan Gold attributes this to retailers’ reluctance to import more than they can sell. The retail and foodservice industries have been among the hardest hit in the wake of the novel coronavirus. Mandatory closures of non-essential businesses across the globe have resulted in a significant drop in revenue for these two economic sectors.
Consequently, many of these businesses are continuing to exercise caution about how they spend their money even as economies around the world slowly begin to re-open. This, together with the already devastating economic impacts of the U.S.-China trade war, could spell bad news for the ocean shipping industry this peak shipping season. Many of the industry’s biggest customers were retailers or suppliers to retailers.
Air Freight
As countries around the world tighten their travel restrictions to contain COVID-19, many airlines have been struggling to stay afloat. Experts have suggested that the virus has the potential to impact the industry even more than the infamous September 11th terrorist attacks. Delta Air Lines, for example, has already seen its revenues from passenger flights drop by a whopping 56%.
Yet, despite these downturns, many of these same airlines have been able to keep their heads above water thanks to government bailouts and air cargo. Cathay Pacific Airways Ltd., Korean Air Lines Co., and even American Airlines Group, Inc. are opening more and more of their passenger planes up to cargo. This adjustment to passenger plane operations not only helps the airlines, but also the companies that are shipping the cargo. Indeed, the move allows airlines to compensate for their losses by way of innovation, and companies to cut the rapidly rising cost of cargo rates. This unprecedented partnership also lowers costs for consumers, who are increasingly buying goods online to reduce potential exposure to the virus.
Additionally, many airports have remained open to air freight flights even while being closed to passenger flights. While many barriers still remain for ground handling, trucking, and logistics companies, airports’ relative lack of restrictions for air freight means that the overall base cost for operations has mostly stayed the same.