The outbreak of Coronavirus (COVID-19) has been eye-opening in the way an illness can impact global supply chains. Shipping to and from one of the world’s largest producers of goods has come to a near standstill. In fact, even if the ports opened and went into full swing today we will still feel the effects well into the remainder of 2020!
If nothing else, this clearly shows that there are several weaknesses in the current way the logistics industry operates. Although it started in China, the Coronavirus has now started popping up globally. From the workforce to the flow of daily commerce, COVID-19 has caused a disruption that will be long-lasting.
Let’s take a closer look at a few of the ways it will shape the current and future state of modern supply chains...
The Human Element
Even in the 21st century, our global economy still relies heavily on a large amount of human labor. The buzzing atmosphere of the world’s largest ports is made possible by the abundance of longshoremen that keep the crates flowing. The issue now is, what do we do when those same workers either cannot or will not show up due to health concerns?
In the case of the former, we are seeing that in response to confirmed cases of COVID-19 that entire cities around the world are being effectively closed. Closures of that magnitude affect the global supply chain across the board, from unmet production needs to monumental shipping backups. This is prompting substantial discussion about the idea of a more automated future.
Robots in the shipping industry are not new but have been seen by most as only a tool to help human laborers. However, our ever-growing tech is allowing for greater complexity in the task the bots can do. Essentially making them more of a coworker than a tool. This could be used to great effect in the future to offset the risk or impact of another pandemic outbreak.
Another weakness that the Coronavirus has shown us involves the distribution and abundance of shipping containers.
As more ports are closed due to health concerns, mountains of boxes are themselves locked into a state of limbo, and this is wreaking havoc on seagoing logistics.
Nothing highlights that problem like coveted refrigerated containers. In a perfect world, they are shipped, unloaded/loaded, and put back into circulation in a matter of days. The number of reefer containers was already teetering on the edge before this virus struck, and this disruption has thrown the carefully balanced in and outbound rotation into a tailspin.
Impact on the High Seas
As port closures continue and returning worker rates remaining low, shippers have no choice but to tighten their belts until the outbreak passes. With containers unable to be moved, it stands to reason that there is less call for ships to fulfill their role. Several of the largest fleet carriers are reporting dozens of cancelations a month or vessels sailing woefully empty.
This has led to a temporary increase in the total cost of freight shipping. However, steps toward mitigation are being taken to keep it as low as possible.
Advanced software, such as ACO, is helping with optimal capacity management to maximize every outbound shipment. As events unfold, this will become increasingly important to keep production up and the global market flowing.
Looking Back and Moving Forward
The weaknesses in supply chains that the outbreak of COVID-19 has highlighted demonstrate the need for some changes to be made.
The possibility of having a more technologically advanced port network would limit the effects of mass quarantine. This, by itself, would go a long way toward rendering the next viral epidemic less economically impactful. It could also slow the rate at which an illness spreads by not even giving it a chance to interact with humans at its point of entry.
Container routing and storage are being forced to modernize as well, with the larger ports having to divert traffic to smaller, less equipped ports. Due to decreased production in the industrial sector, these boxes are clogging up space or are shipping at a lower capacity... leading to more backups. This leads to an increase in the cost of shipping which is felt by everyone from the producer to the consumer.
As time marches on, however, the infection rates will decline and people will return to work, once again powering the global effort of progress. Inbound and outbound traffic at the ports of the world will once again be at full capacity and shipping rates will stabilize. Pandemics like this have been a constant occurrence throughout mankind’s history, and it is imperative that we learn from each of them so we can be better prepared for the next one.
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