The longer term impact of the coronavirus outbreak on forwarders

Richard Charles, chief executive of independent forwarding network WACO, outlines how supply chains could change following the coronavirus outbreak.

The coronavirus has changed airfreight, with the majority of passenger aircraft parked, some never to return to airline schedules, and freighter capacity at a premium as global demand for medical supplies surged.

What will airfreight supply chains look like in the medium and longer term? Can the rapid decline in international bellyhold airfreight capacity be compensated for by freighters alone and what does that mean for shippers?

Manufacturers or producers may focus on the higher margin products rather than maintaining a spread of goods, to streamline supply chains and reduce inventories.

Logistics managers will look at how and where they source goods. Globalisation and the use of lower-cost production centres created complex and longer distance supply chains, particularly from China to Europe and the US.

But even Chinese producers have regional suppliers, an often unappreciated factor.

So, does it make sense to maintain an extended supply chain or to assess near-sourcing, at least for part of a shipper’s inventory needs, and create a parallel supply chain to mitigate risk?

What can be taken for granted will be shippers’ continued demand for a freight forwarding network that is agile, flexible and has longstanding business relationships with a range of bellyhold and pure freighter airlines.

The WACO system is ideally placed to take advantage of this.

Built upon the business principles of agility and flexibility, The WACO’s exclusive global network of well-resourced independent freight management companies, has the digital resources to support our people who have the knowledge and experience to find new solutions.

Digitisation has the potential to ease and improve the daily business processes – even more so in unpredictable and challenging times. It is likely that this impetus will act as an accelerator for investment in the industry.

Digitisation is essential for air cargo, not just for bookings but further down the consignment timeline, for shipment pre-clearance and as a replacement for paper-based procedures.

This will enable forwarders, such as those in the WACO network, and airlines to exchange data more quickly and provide visibility for shipper customers.

During the crisis, home-working became the ‘new normal’, and it already feels as if we are in a new era, with home-working not seen as a disruptor but as an enabler.

This radical change is occurring along the entire supply chain, from shipper to freight forwarders, truckers, airport ground handlers and the airlines. Businesses and consumers will act differently after the crisis and that will be powered by the internet.

Apart from the rise in demand for medical supplies and devices during the crisis, there has been a substantial rise in e-commerce, as the enforced global lockdown saw even reluctant online shoppers order goods over the internet.

Some of these newcomer online shoppers will be converted and so e-commerce logistics, with growth already on a steady upward curve, will surge ahead. Airfreight will be the mode of choice and will probably push out lower yield goods such as perishables, when capacity is tight.

International passenger schedules will take longer to recover, as long distance travel remains outside the comfort zone of most business class and holiday travellers.

Flights are now full of PPE and other medical supplies. But what comes after that?

The return of a peak season, albeit lower than normal, depends on whether consumers are willing to spend or save, fearing a second wave of Covid-19 infections.