The global pandemic highlighted the need for smooth supply chain operations. The measures introduced by governments to limit the spread of the virus have affected all aspects of life, including logistics networks. Mykolas Tokarenko, Head of AsstrA’s Baltics & Belarus Container Division, discusses how the coronavirus and quarantine have changed the maritime transport market.
- How has the pandemic affected the redistribution of sea freight flows?
There have been no changes on the China-Belarus, China-Russia, and China-Lithuania trade lanes, the most popular ones via which our customers regularly order deliveries. Under the influence of the pandemic, the number of import shipments from China and Spain decreased. Dependence on Chinese exports noticeably disrupted the supply chain at the start of the pandemic, triggering delays in shipment. Therefore, a number of countries have openly stated the need to review existing routes.
In the first quarter of 2020, work continued “by inertia,” i.e. there were shipments of goods produced before the Chinese New Year under 2019 contracts. Since the second quarter, the demand for transportation decreased for products related to the construction, fashion, and the automotive industries.
At the same time, the delivery of long-lasting food products increased. Other goods commonly transported included preservatives, nuts, convenience goods, pharmaceuticals, and personal protective equipment. During the quarantine, the focus shifted to essential goods.
Another influencing factor was the weakening of the Belarusian ruble in March 2020. On the one hand, imported goods that are paid for with foreign currency have risen in price. This has caused a decline in imports. On the other hand, a cheaper ruble has made the export of Belarusian goods like wood products, powdered milk, meat, and fertilizers more competitive.
- How have port procedures changed due to the pandemic?
The processes are adapted to the new realities and there are no significant operational delays. The ports take generally accepted precautions including requiring the use of personal protective equipment and social distancing.
If necessary, quarantines were introduced. In China, for example, drivers who deliver containers to ports from other provinces are required to undergo a two-week quarantine. In Brazil, cases of quarantines for entire vessels have been reported. Some ports have imposed restrictions on crew changes.
- Have shipping cost and volumes of shipping changed due to quarantine measures?
The current situation increased the cost of sea freight. Due to the decrease in the volume of cargo flows for a number of industries, sea lines began sailing empty vessels on the China-Europe and China-USA routes. Such measures led to a shortage of space on ships and priority for higher-priced shipments.
Decreased consumer demand provoked a decline in imports to the Baltic states. Less imports meant fewer empty containers available for exports. A lack of packaging and space on ocean vessels led to higher export rates.
The March drop in oil prices, which provoked a general decrease in sea freight rates, also had an effect. Some market segments show growth, while others, on the contrary, are sagging. At the same time, total traffic volumes are falling faster than they can be replaced.