Hi All!
I'm Sreelakshmi M N, second year MBA student at Amrita School of Business Coimbatore. Recently I came across an article about the impact of Covid-19 on air and ocean freight and how they manage the uncertainties and here are some insights that I gathered.
Covid-19 has created unexpected demand pattern which in turn has created lot of uncertainties in logistics. In order to get ready for peak seasons Ocean freight and Air freight do a lot of research and then forecasts depending on previous demands. But things have completely changed this year due to covid-19.
An unusual buying pattern is seen in customer's purchase behaviour because of which it is really difficult to forecast the demand pattern.
While some industries like automobiles, hospitality are struggling to be in their space, industries like healthcare and paper have seen the highest demands of all the time.
With the continued increase in the number of COVID-19 cases and unlock 4 happening there are still many states that are maintaining their restrictions. How much inventory to carry is an unanswered question due to the unpredictable condition and hence it is difficult to predict the actual spending of the consumers.
Air Freight Market
As the air carriers continue to limit passengers due to social distancing and restrictions, the overall capacity on a year over year basis is expected to reduce.
While on the other hand the demand for air service is likely to remain strong because of the increased consumer purchasing and the need for personal protective equipment (PPE). Once the vaccine come, the demand for air freight is expected to grow even more.
Ocean Freight
Ocean carriers have removed a significant amount of capacity which helped them to align the supply with the decreasing global demand. By doing so they have kept the flight rates from falling down. They continue to do mergers and acquisitions that helps them to remove costs.
You have stated that ocean carriers have removed a significant amount of capacity and have kept the flight rates from falling down - this has resulted in a lot of accidents since the pandemic, mainly oil spills - Russia, Maldives, and en route Kuwait to India. We have also encountered air carrier accidents too. While costs reduce, doesnt safety become major concern in such a situation where maintenance of equipment is not properly overseen in this period ?
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