Regional pulse: US Midwest forwarders anticipate supply chain disruptions into April

Freight forwarders with operations in the Midwestern U.S. report that while they saw year-over-year growth in volumes to and from the region through the end of 2019, the COVID-19 outbreak has had a significant negative effect on supply chains. Beyond the general downturn in volumes moving globally, the most pressing concern for freight forwarders in the region is the disruption to global supply chains caused by the outbreak. Like other logistics companies, freight forwarders in the Midwest report seeing a massive reduction in capacity due to flight cancellations by major commercial airlines. In particular, both AIT Worldwide Logistics and SEKO Logistics reported a significant downturn for imports into the U.S. from China, and are prepared for the trend to continue through March and April since business and transportation in China only began gradually ramping up at the end of February. Ill.-based AIT Worldwide Logistics, which serves local, regional and international markets, hosts operations out of over 60 global offices, including locations in the Midwestern U.S. in Chicago, Denver, Detroit, Houston, Minneapolis, Kansas City, Mo., and South Bend, Ind. Although not typically considered part of the Midwest, Denver and Houston are included by the company as part of its central region for U.S. planning and operations. According to the company, currently the highest-volume lanes for its central region are imports from Asia and exports to both Asia and Europe. There has also been an increase in demand for medical and sanitization products from the U.S. to China and other Asian countries, AIT said. Regarding disruptions to supply chains caused by the coronavirus, AIT said it has responded by providing charter aircraft and booking cargo airline only (CAO) shipments for its customers in January and February. “We foresee there will be an impact with ground transportation in China as people begin to return to work and manufacturing resumes,” said Ryan Carter, vice president Americas operations for AIT. “It will take some time to realign drivers and equipment with demand. Likewise, we expect to see spike in demand for trucking in the U.S. once imports from China are flowing in again. In the Chicago market, congestion at Chicago O’Hare International Airport ( ORD ) has been somewhat alleviated by the addition of the Northeast Cargo Facility, Carter commented. However, wait times continue to pose operational and financial challenges. Therefore, AIT has adopted a strategy of interacting with the airport during nonpeak hours in order to speed cargo through and minimize costs. SEKO Logistics agreed there has been an increase in volumes of cargo to, from and through the region. The company, which is headquartered in Chicago, hosts local, regional and global operations along with two regional headquarters in London and Hong Kong. Brian Bourke, chief growth officer at SEKO, said the top commodities it moves are e-commerce, aerospace, high-tech and perishable produce products, in that order. “E-commerce is one of our fastest growing areas for airfreight and is booming for both U.S. imports and exports — although U.S. exports are incredibly strong — and this has really made up for the dip in demand seen in more traditional air cargo markets we saw last year,” Bourke said. “There is also a huge international market for U.S. goods, especially on the food side, and the Midwest continues to be the breadbasket of the world.” While it saw growth last year, SEKO also said it has seen major impacts to international operations as a result of the coronavirus outbreak. Since it acquired New York-based freight forwarder and cross-border ecommerce firm Air-City Inc. in January, SEKO has seen its business skyrocket in U.S.-China trade lane, which has become the company’s fastest growing trade lane, predominantly for e-commerce and medical supplies sectors. According to Bourke, there is a scramble across industries with cross-border shipments. “As the factories come back online and charters are repositioned, there's going to be an imbalance in capacity for March and probably into April; it will be a very dynamic market, especially for critical goods on the high tech and automotive side,” Bourke said, adding that fast fashion will also likely feel an impact from the supply chain disruption caused by the coronavirus.

Regional pulse: US Midwest forwarders anticipate supply chain disruptions into April

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