In the aftermath of consumer panic buying of items such as toilet paper and sanitizing supplies, a massive need for trucks to help restock stores has shrunk the capacity available for other products leading to an historically tight trucking market that has dropped 20% in volume in the past two weeks although high-demand goods are still soaking up specific transportation capacity, according to ABI Research.
Even as demand for trucks dedicated to car delivery and perishable restaurant supplies has decreased, for example, the need for transport of everyday needs continues to weigh on truck availability.
Logistics and distribution is being affected by the coronavirus pandemic. The American Association of Port Authorities anticipates volume decreases of at least 20%, including blank sailings, which may cost carriers $1.9 billion. As for rail freight, intermodal is down by about half, including from California’s Long Beach and Los Angeles ports. As data comes in, global air cargo volumes for the past month could come down 9%. The coronavirus effects on freight add to the already existent decreases resulting from tariff impositions by the U.S. and China.
“In the short term, there has been more than a six-week delay in shipments for cargo sourced from China. Other markets from Vietnam to Mexico often rely on Chinese components and raw materials, creating a knock-on effect to the supply chain, including transportation and logistics. The initial loss of road transport demand has begun in the ports and is moving to the warehouses and inland routes. Cargo capacity demand in China is beginning to demonstrate some initial signs of growth, with airfreight between China and the U.S. growing 27% over the last 14 days, creating a demand/supply imbalance,” said Susan Beardslee, principal analyst at ABI Research.
The capacity challenge will move to containers, which are stranded outside of China, as well as trucks. However, as the coronavirus has spread outside of China, government actions have included restrictions on travel from 26 European countries to the U.S.
“In the longer term, there is little visibility to forecast, which will have a material impact on transportation and logistics this year. The virus is now impacting the global supply chain, with a current estimate of 113 countries identified as reporting cases. Transportation requirements will be hard to predict. Both capacity and pricing swings are anticipated across transportation modes, with the associated impact to shippers worldwide,” said Beardslee.