Managing international business during the Covid-19 crisis
24th March 2020
Spatial Global keeping calm and carrying on
The spread of the COVID-19 virus within and beyond China is having a major impact on the logistics industry and will continue to cause disruptions for some time.
Various UK industries are facing challenges along their supply chain, from low vendor capacity and production, raw material shortages, lead time issues, road haulage capacity and blank sailings, where a vessel skips one port, or the entire string is cancelled.
Spatial Global is the trusted expert for many businesses trading internationally.
Based in Castle Donington, Spatial Global is an award-winning international freight forwarding company, providing UK and global mailing services and e-commerce fulfilment, warehousing and logistics.
As a business which specialises in facilitating overseas trade, it has continued to distribute publications globally and manage exports and import shipments during this global crisis.
As many businesses temporarily close and people self isolate, their ecommerce fulfilment has also increased as people switch to online shopping like never before.
Spatial Global’s Executive Chairman, Mike Wallis, said:
We've not missed a shipment yet, probably because we're a trusted, well liked freight forwarder, with long standing relationships with major airlines and shipping companies. “As the focus on business switches to reliability, it's now more than ever, businesses need to work with trusted partners.
Here, Mike shares his top tips for managing international business during the Covid-19 crisis:
Flexibility and a great team are key
As a trusted partner in the supply chains of our clients, we have a team approach.
Working with our customers as if we were part of there business, we understand their products, their customers’ needs, and make sure we deliver on the promises made.
Our team also extends to our network of partners in the airlines, shipping lines and road haulage. Maintaining a one team approach with our suppliers means working with them to get the best outcome.
It's this combined strength, trust and 'team approach' which pays dividends when we face challenges like this.
Whether it's adverse weather, trade wars or embargoes, freight forwarding has many challenges lurking below the surface of almost every shipment.
But nobody in the logistics industry has ever experienced anything like this before.
What's happening to international logistics'
With the early impact of the coronavirus largely on supplies coming out of China, it's now impacting on a global scale. With a significant reduction in passenger flights, and an increasing number of airlines becoming grounded, there's been a huge impact on air freight capacity. As a result, prices have increased between four and 10 times what they were pre-crisis. We expect airfreight to become even less available and more expensive, putting increased demand on sea freight.
Sea freight demand increases and priced go up
As a result of more being shipped by sea freight, the prices have increased there too, as demand reduces availability. Prices are typically double what they were pre-crisis. However, goods are still moving, and businesses are being realistic about what’s possible. Accepting that project timescales may need to be put back, and a general understanding that the ‘I need it tomorrow’ approach isn’t necessarily going to deliver- reliability has never been more important.
Keep your business moving
What should businesses dependent upon exports or imports do' Well, if your business is suffering from supply chain constraints due to Covid-19, you need to be aware it's likely to get a lot worse before it gets better.
Once production normalises, high demand for capacity available in the market will intensify. This is because of the disrupted supply chains of major automotive manufacturers and global electronics makers. This has resulted in severely depleted buffer stocks at their facilities are either running low, or even completely out, which means while all normal transportation modes remain clogged, they will quickly consume all spare airfreight capacity to alleviate the critical situation in their factories.
Logistics solutions to meet your urgent shipping needs
Air freight forwarding is still possible, but with very limited connections.
However, the global shipping lines continue to operate, keeping world trade running despite facing severe disruptions.
Land transport is an option but is subject to disruptions and slowdowns.
This is due to increased border control, sanitary measures (temperature measurements by drivers, etc) and the closure of certain borders and detours. All are impacting driver and vehicle availability. This will contribute to making road transport less predictable.
However, so-called ‘greenways’ will be defined within the European Union for cross border emergency transport such as food, medical goods and protective items, or even livestock, for it to circulate without hindrance.
It's testing the businesses systems and leadership
In this uncertain time, Spatial Global is following the situation closely and we are working with our customers to minimise the negative impact on their own supply chains.
However, through robust business continuity planning, we're already taking measures to ensure we can continue to support our clients through this crisis.
With remote working, good access and communications to our supplier network, plus remaining flexible, we're confident we can keep our clients and their customers happy. We are even moving some of our mail services by sea, to ensure its delivery.
What does this mean for future international trade'
It’s still far too early to tell what the consequences of coronavirus will be to supply chains, the logistics industry and the wider economy.
The chances are that the crisis will pass and its impacts mitigated by travel bans and extended holidays.
However, this must be a warning to politicians and all in the industry that many modern supply chains lack resilience.
Businesses which have a globally integrated supply chain and run ‘just in time’ stock are becoming all too aware of the consequences. But they will have the size and Government support to overcome this.
Everyday businesses, which rely on imports or exporting, may need to rethink their strategy on international businesses.
The ‘commodity purchase’ approach of freight and shipping is exposed when the norm is so severely challenged. Paying a little extra and having expert support to help manage as and when things aren’t so straightforward will be considered a small price to pay for a while to come.