How the COVID-19 Pandemic is Impacting the 2020 Summer Shipping Season

Posted by World Trade Distribution
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Filed Under: Container Freight

The shipping world has been buffeted by many unprecedented events over the last couple of years, from major natural disasters to a trade war with China and now, a pandemic. The peak shipping season, which runs from August to October, is already set to feel the impact of the COVID-19 pandemic as suppliers remain wary of an economic downturn. What can shipping companies expect for the rest of 2020?

What’s Happening with Current Shipments?

In early 2020, the U.S. economy was already starting to feel the effects of the tariffs and trade battles between the U.S. and China. And when COVID-19 began to spread in earnest in early March, many states issued stay-at-home orders shutting down certain businesses for the foreseeable future. These shut-down orders, some of which remain in place as summer winds to a close, tended to disproportionately affect restaurants, bars, and retail stores.

While some business owners were able to keep afloat through government loans and grants, others are gone for good—and with them, a large part of the current demand for overseas inventory. To add to this pain, the federal $600-per-week unemployment benefit expired at the end of July and losing this $18-billion-per-week boost to the economy has left many businesses smarting.

Though heavyweights like Amazon, Wal-Mart, and other companies with a robust online presence are starting to stock their warehouse shelves with holiday inventory, even they are being more conservative in usual when it comes to importing only what they plan to sell. These retailers’ early start on holiday shipments led for a month-over-month increase of 16 percent between July and August, but total container imports are still significantly down when compared to 2019 and prior years.

What Should Shipping Companies Expect Going Forward?

The unprecedented nature of the COVID-19 pandemic has made it tougher than ever for supply chain experts to make accurate predictions. In some parts of the country, items like toilet paper, meat, and hand sanitizer are still in short supply, leading retailers to impose purchase limits on these items and place larger orders for more. On the other hand, the precarious state of the economy—with the major U.S. stock indexes hitting all-time highs while one in six Americans are out of work—can leave all but the retail mega-giants reluctant to leverage themselves into extra fall and winter inventory that may become obsolete before consumers start spending money again.

The next few months, however, should provide far more insight on what 2021 will look like. A vaccine may be developed by mid-2021, the time point many researchers have identified as the turning point for the likely economic fallout of COVID-19. If treatment options improve or a vaccine can be brought to market before next year’s flu season, the shipping season beginning in August 2021 could look more like those of years past, as consumers renew old spending patterns to make up for lost time and celebrate a return to normalcy.

Aug 26 2020

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