Consultant Insight: Freight forwarders and PPE demand

[caption id="attachment_69752" align="alignright" width="336"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] After suffering declining volumes since mid-2018, this year had been looked upon as a period for possible rebound for global airfreight. Then the COVID-19 crisis turned the market upside down. While an expansion of the air cargo market is no longer expected until 2021, at the earliest, we have seen rates soar in response to the sudden drop in airfreight capacity as passenger planes were grounded. Although some passenger airlines have readjusted to carry only cargo throughout the crisis, demand for cargo space has continued to rise as the need for personal protective equipment (PPE) exceeds available capacity. Indeed, according to a Cargo Facts Consulting brief, U.S. April air trade data indicated declines in export and import tonnage of 24% and 15% respectively, with the top-performing import commodities all being PPE-related. Rubber gloves saw an increase of 4 metric kilotons (kt), protective garments were up 40 kt, and pharmaceuticals were up 1 kt. PPE in three acts While April trade data shows the first wave of PPE logistics, Tom Pelliccio, executive vice president of international for Pilot Freight Services , recently provided an overview of the company’s recent business. According to Pelliccio, the first phase centered heavily on masks, and lasted for about seven to eight weeks, with most exports originating in China. A second phase shifted attention to medical gowns originating in Southeast Asia and Turkey, in addition to China, with volumes surpassing masks. In parallel, import demand began to climb for disposable gloves originating in Vietnam and Malaysia, where 80% of medical-grade gloves are manufactured. Pelliccio has observed that, as manufacturing of gowns ramps up, a shift appears to be moving toward near-shoring and the U.S. domestic market. At the beginning of the pandemic, movement was all via air cargo. But some shippers are beginning to open up to air-sea combinations to reduce logistics costs. “Visibility is critical,” Pelliccio said. Over the years, his company has built an internal system that provides customers with live shipment details by customizing reports based on specific customer needs. See also: The Power 25: Back to the basics for forwarders amid supply chain chaos C.H. Robinson has reported similar trends in terms of customs compliance issues. For example, cargo inspection rates of PPE out of China have increased, extending the average waiting period prior to transportation from three hours to up to three days. Import customs delays and shipment refusals are also increasing around the world. “We are tracking regulations that change weekly and leveraging our vast network to help our customers strategically manage the mounting risks the pandemic has presented,” said Bob Biesterfeld, president and CEO of C.H. Robinson. Biesterfeld speaks to the current importance of freight forwarders. While global trade has always had risks, whether political, economic, natural disaster-related or other, this is the value of a freight forwarder: The ability to guide their clients through turmoil by quickly identifying market and regulatory changes, optimal trade lanes, modes of transportation, the best rate, secure capacity, etc. As observed by Pelliccio, Pilot Freight Services has seen increased demand for “cradle-to-grave” service — that is, from managing and collaborating with manufacturers, air cargo and other transportation providers, customs and the final customer. For a number of large freight forwarders this is a strategic evolution to becoming lead logistics providers, as noted in Logistics Trends & Insights’ report on Global Freight Forwarding. According to Pelliccio, Pilot Freight Services expects demand for PPE to remain strong through at least the end of this year, and perhaps become a focused vertical for many other 3PLs and forwarders beyond 2020. With the retail business and industrial goods picking up, the company further expects a decent fourth quarter, with continued demand for cradle-to-grave services.

Consultant Insight: Freight forwarders and PPE demand

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