Covid-19 Effect on Global Supply Chain and Shipping

Since January 2020, the COVID-19 pandemic has caused extensive impacts on almost every sector of the global economy, including world trade and global supply chains. The container shipping section has fallen 10.3% in the past 12 months to its lowest level since September 2003, and global freight transport could reduce by up to 36% by the end of 2020. This however will not be a complete figure across the whole world, instead it will vary depending on the region. An estimated reduction of more than half is projected for ASEAN countries, Russia/Central Asia and India. For China, the effect is just above a quarter less freight. Europe and the Americas are in the middle of the range with reductions of around 40%; only the Andean countries are projected to be hit harder, with a 50% fall in freight activity.

This year saw the shipping industry presented with many complications as climate change and shipping challenges raised, and the addition of the COVID-19 pandemic gave an even darker outlook. One of the most challenging effects of the pandemic has been the restricted labour, and by extension the inability to manufacture and transport goods. Lockdown policies have resulted in the closure of plants and factories, causing supply chain shortages across the globe.

As more than 90% of the world trade in terms of volume are transported by sea, the global maritime supply chain is considered critical. Some of the shipping challenges caused by the pandemic are disruption at ports, crew changes and reduction in sailings. The inability to change crews is affecting the welfare of sailors, which could lead to an increase in human error on board vessels. Disruption of essential maintenance and servicing heightens the risk of machinery damage, which is already one of the major causes of insurance claims. Cargo damage and delay are likely as supply chains come under strain. Disruption to maintenance raises machinery damage and breakdown concerns as the pandemic hinders essential maintenance and servicing.

There is need to re-evaluate global maritime supply chains considering the new business environment. It is vital to apply special regulations at the ports, and make sure everyone is applying similar policies to keep the supply chain functioning. It is well known that the maritime industry is one industry without which the current world economy could not survive.

Working from home has become the new normal and many industries have adjusted. But in an industry as traditional as shipping, this is causing a major shake-up, not least in the uptake of technology. The demand for digital technology has risen tenfold as maritime businesses embrace new ways of working during the coronavirus pandemic. Historically shipping companies were slow adopters of technology, however there many companies accelerating their digital strategy to improve collaboration between teams on shore and at sea, create a connected workplace culture and to generate major cost and efficiency savings. They are also using them to operate efficiently in the current situation and beyond, access to accurate and up-to-date data is crucial. It is estimated that full recovery will take about three to five years, a rough patch in which companies will be severely tested.

Despite the challenging environment, operations continue to function at TradeLink. We have taken a number of steps to protect our business operations, while ensuring that we continue to provide essential, reliable supply sources to the our clients around the world.

TradeLink has a longstanding remote working policy and encourages all staff to do so on a regular basis. We also encourage paperless processes, therefore our phone systems, electronic communication systems and business management software will function uninterrupted even if it becomes impossible to operate at any of our offices in South America and Australasia. With 50% of our current workforce already working remotely on a permanent basis, we are experienced in running our business in this manner and we do not foresee any changes in our operations.