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The Impact of COVID-19 on Ocean Carriers – How BlueX Can Help

Tomas Swinburne
Jun 17, 2020
Containers on a yard

2020 has been a turbulent year for ocean shipping.

Despite the challenges presented by the virus, we at BlueX are confident that the global economy will steer towards more favorable waters once lockdowns are lifted.

Until then, we are helping ocean carriers to minimize the impact of COVID-19 and prepare them for the new reality after COVID-19 recedes. Maersk’s Q2 results have already showcased that digitalization is changing their internal operations, with their online spot product accounting for an astonishing 41% of their spot rate cargo.

We at BlueX offer a pathway to allow ocean carriers to leverage the E-commerce tools they need to digitally transform for increased revenues.

How?

The BlueX Ocean Carrier White-label E-commerce Solution can help reduce the impact of COVID-19 with:

  • Rate and Inventory Management tools
  • AI-Driven Dynamic Pricing for rate suggestions
  • Automated business intelligence reports to better manage your E-commerce

Ocean carriers need to prepare for the post-COVID-19 reality. Specifically, they need to digitalize with E-commerce solutions.

The Impact of COVID-19 on Ocean Carriers

In response to COVID-19, ocean carriers canceled many sailings. This equates to roughly 11% of total sailings, which, according to Safety4Sea, breaks down to:

  • 13% of 2M sailings
  • 17% of Ocean Alliance sailings
  • 17% of THE Alliance sailings
  • 8% of non-alliance sailings

This has had a significant knock-on effect for the industry with issues ranging from supply-demand imbalances, demurrage problems, and container and equipment shortages.

As a result, ocean carriers may not be able to take full advantage of the post-COVID-19 shipping boom.

Supply-Demand Balance Issues

It’s difficult to say when, but there will be a return to demand for ocean carrier services. When this occurs, carriers will need to ensure their supply-side can satisfy demand.

Supply-side issues are somewhat inevitable as container and equipment shortages will require carriers to take more time to jumpstart their operations to full capacity after carrying out blank sailings and reducing operations to counteract the effects of COVID-19.

According to Logistics Management, carriers can mitigate some risk of a supply-side imbalance, by laying up owned vessels in the event of a prolonged downturn in demand.

We can be confident that demand will return, and ocean carriers need to prepare to ramp up their services to meet the coming post-COVID-19 boom.

Container and Equipment Shortages

The uneven distribution of containers and equipment is causing a global shortage.

Container and equipment imbalances account for $20 billion annual losses. COVID-19 will further exacerbate this problem.

Even as trade between Asia and Europe increased by 25% in May 2020, the shortage of containers is hindering the recovery, with an estimated 6 million new containers needed to meet demand. This presents a problem as factories that manufacture containers remain closed.

Demurrage and Detention Issues

With businesses failing to pick up their imports due to warehouses being full or closed, demurrage and detention are presenting challenges for everyone in the industry.

For carriers, freight fluidity is being hit hard, and higher rates of demurrage and detention are compounding other problems such as equipment and container shortages.

As stated by Safety4Sea, ocean carriers will continue to place a high priority on incentivizing shippers to collect cargo. In other words, demurrage and detention charges are likely to remain in place.

However, the Federal Maritime Commission recently issued new guidance. They are investigating whether demurrage and detention charges actually “incentivize” freight fluidity. The onus of responsibility of demurrage and detention could switch from shippers to ocean carriers.

Such a move could further reduce margins for ocean carriers.

Preparing for the Post COVID-19 Boom with BlueX

While the impact of COVID-19 on shipping has been substantial, the post-COVID-19 shipping boom will be an opportunity to regain losses.

For ocean carriers, revamping freight fluidity to pre-COVID-19 levels will be important for offering space to as many customers as possible. However, it may take some time to resolve as container and equipment imbalances could continue to hinder the recovery of operations.

Ocean carriers need to plan for various scenarios, depending on the customer demand for shipping.

For example, if lockdowns continue, blank sailings will continue. Likewise, if lockdowns are lifted across continents and regions simultaneously, carriers may find they lack the supply-side needed to match demand. Such a situation may result in shippers searching for guaranteed space options from other ocean carriers.

How BlueX Can Help – Your Pathway to Digitalization

We’re leading the charge for ocean carrier profitability and digitalization through the BlueX Ocean Carrier White-label E-commerce Solution that offers rate and inventory management, dynamic pricing, and business intelligence reports.

Increase Revenue with the BlueX White-label Solution

According to our research, non-digitalized carriers are missing out on an estimated $45 billion of market cap value. By embracing digitalization via FreighTech, ocean carriers can also drive two times more shareholder value.

The BlueX ready-to-go White-label Solution allows ocean carriers to digitalize via E-commerce tools.

Ocean carriers can track market trends with BlueX reporting tools with AI-driven analytics, and match supply and demand to effectively maximize profits. Likewise, ocean carriers also offer customers the following benefits through our white-label solution:

  • Faster bookings with up-to-date rates
  • Accurate shipping information
  • A platform to offer trade services

Evergreen Line’s BlueX-enabled online booking platform, GreenX, showcases many of these benefits and has already garnered more than 6,000+ sign-ups since launching.

Adapt to the Post-COVID-19 Reality

Nobody could have predicted 2020 would be such a tumultuous year for shipping. What matters now is how carriers execute on their operations during the COVID-19 crisis, post-pandemic shipping boom, and beyond.

By adopting the Ocean Carrier White-label E-commerce Solution, your business will be in an advantageous position to digitally leverage services to increase revenues.