It’s 2021 and COVID-19 is still affecting our world in enormous ways. What seemed like it might only last a couple of months has been going on for more than a year now. For many import export businesses, the impact of COVID-19 has been debilitating.
There have been tons of changes to the international shipping industry since COVID came on the scene. Like the other ways our lives have been transformed (think working from home and washing your hands every 5 seconds), many of these changes may stick around for years to come.
Experts say the short-term outlook doesn’t look very good for the shipping industry, but there’s no reason to abandon all hope. The United Nations Conference on Trade and Development (UNCTAD) predicts a return to positive growth and a 4.8% expansion in 2021.
Let’s take a look at the most significant ways COVID-19 has impacted international shipping and how they might affect the future of your import-export business.
1. Supply Chain Disruption
It’s obvious most global supply chains have been severely altered by the pandemic. Companies that once looked to faraway suppliers are now dealing with the reality of port closures, shipping network disruptions, and increased maritime regulations.
The UNCTAD has issued a request for authorities to designate seafarers as essential workers not subject to travel restrictions. If your supply chain has been broken, it’s advisable to check the most current information about port closures and travel restrictions before rebuilding your supply chain.
2. Lower Demand
Due to the new barriers to trade, demand for maritime shipping has decreased significantly during the pandemic. In fact, the global Gross Domestic Product (GDP) fell by 4% in 2020, and seaborne trade dropped by more than 4%.
Nevertheless, the container shipping industry was able to maintain profitability by cutting costs and reducing cargo capacity. This allowed freight rates to remain stable despite the sharp decrease in demand. That’s likely why you haven’t been able to get a discount on your shipments.
3. Delayed Shipments
Because the container shipping industry pivoted quickly and slashed cargo capacity, shippers have been dealing with delayed delivery dates and severe space limitations. This has caused further disruption for import-export companies in an already uncertain environment.
As a small business owner, the best way to deal with this situation is to extend your timelines for expected delivery. Your customers understand the difficulties that have arisen during this time, but they would prefer to know ahead of time that there may be delays.
Are you wondering how to import cars to Canada while COVID-19 persists? Read this.
4. Sanitary Protocols
The virus itself has required numerous sanitary protocols to be put in place. Shippers are responsible for onboard safety, medical supplies, and restraints on crew travel. There’s also the difficulty of conducting regular onboard inspections as well as the reality of port entry delays due to health screenings.
This puts significant pressure on shipping companies who must make arrangements for strict safety measures on their vessels. However, these sanitary protocols may prove useful in the future in the event of another health crisis.
5. Bankruptcy
Unfortunately, many small import-export businesses and shipping companies have gone under due to the COVID-19 pandemic. Lower demand, increased regulations, and supply chain issues have combined to create a cutthroat environment for small companies.
If your import-export business went bankrupt in 2020 or came close, you know more than anyone how devastating it is. Given the chance to rebuild your business, be sure to take into consideration the possibility of localizing your supply chain to avoid the ever-changing regulations in many countries.
Click here for our tips on pivoting your business to weather the pandemic.
6. Trade Protectionism
Due to the international trade challenges imposed by the pandemic, many countries have developed inward-looking policies and shifted their focus to trade protectionism. These policies tend to restrict international trade in order to boost domestic industries. This is a trend that began before the pandemic but has been exacerbated by the unexpected twists of 2020.
Although these policies pose a threat to global interdependence and international trade, they have positive implications for the world’s low-carbon agenda. Supply chain shortening allows companies to contribute to the fight against climate change by minimizing the need to outsource from distant locations.
7. Digitalization
With a virus spreading throughout the world, port workers, crew members, and businesspeople are understandably hesitant to handle paper documents and invoices. This has contributed to the increase of digitalization in the international shipping industry, a development that’s been long overdue.
The digital transformation has a dark side, however. It heightens cybersecurity risks that have the potential to cripple the entire industry. More investment and research is needed for conscientious digitalization that will speed up international trade.
To discover the top shipping trends of 2020 and what they mean for your business moving forward, go here.
8. Crisis management
The COVID-19 pandemic revealed just how unprepared the shipping industry was for a global crisis. As shipping companies and port authorities scrambled to put sanitary measures in place, nations were shutting their borders and global demand waned. This resulted in more than 300,000 stranded seafarers who were at sea for months beyond the end of their contracts.
While the pandemic has been extremely hard on the shipping industry, it has also been the catalyst for the development of crisis management measures and safety protocols. The next time a worldwide crisis unfolds, the international shipping industry will be ready–more than when it was blindsided in early 2020, at least.
Wondering about the future of your import-export business amidst all these changes? You need someone who’s as invested in the success of your business as you are and someone who can easily handle all the logistics so you don’t have to. At BorderBuddy, we offer solutions for businesses of all sizes, so give us a call today.