Key takeaways

• More freight forwarding companies start to prefer air cargo than ship because of the recent escalation of freight charges for cargo ships and containers
• Maritime services are unreliable with the port shutdowns especially in china
• With the advent of COVID-19, lockdowns are in place in Vietnam, causing a constant struggle for the manufacturers in Vietnam to combat the shipping delays by choosing air freights.

Recent strain in the container availability and the exacerbated pricing of sea freight poses a huge problem to manufacturers and buyers. In Vietnam, due to COVID-19, multiple factories were shut down. To compensate for massive production slowdowns in Vietnam and ensure seasonal imports reach on time for holiday shoppers, major garment and footwear retailers are increasingly attempting to move from ocean to air delivery. According to logistics organisations that manage freight, air freight costs leaving the country are fast increasing due to a surge in demand for all-cargo charter capacity.

To deal with the ongoing problems on supply disruptions and port congestions, importers especially from China use mode conversion as a risk mitigation strategy. The increasing demand for supplies from North America is not supported by sufficient vessels on the ocean. Hence, the air transport of materials becomes a necessity for factories operating in Vietnam. With the present status of factory shutdowns in Vietnam, the factories are far behind in fulfilling the demands of North American buyers. Hence, the goods have to move by air when the production schedule resumes to compensate significant delays in the supplies as the ocean freight is unreliable.

Vietnam being the country that produces many winter apparels, with the season approaching very quickly, there is expected to be a chaos in the supply chain of winter articles. Panjiva, the supply chain research unit of Standard & Poor’s Global Market Intelligence, mentioned that due to COVID-19 outbreak, couple of Nike’s Vietnamese sneaker suppliers shut down production in July. Several other manufacturing plants in Ho Chi Minh City and surrounding areas of Binh Duong and Dong Nai experience trouble coping with strict health protocols and limited lockdown exemptions, that pose an impact on the availability of truckers and dockworkers. “Apparently, the truckers need to display a negative rapid COVID test result taken within 72 hours as they enter and leave the restricted zones”, said Chicago- based SEKO logistics. Hence, the more positive cases, the less availability of truck and drivers.  

Air Freight Restrictions and Challenges

The air travel restrictions are strictly into effect since the moment COVID-19 started speading which indeed reduced the air cargo capacity. Preventative measures including social distancing in the airport and the shorter working shifts has definitely slowed down the supply chain abilities. “Passenger flights have only limited spaces for cargo and the extra airlift is prohibited by the airport authorities for charter flights”, Rosen said. EFL is doing their best in contracting with few airlines for about 30 charter flights weekly in order to make sure that the shipments moved from Vietnam to the U.S.

Since the beginning of August, the air freight charges has more than doubled. There is more demand for aircrafts from Ho Chi Minh city and EFL is communicating with airport authorities to loosen up on landing rights in the next few weeks. EFL also sent a note to their clients to share with them the expected forecast of orders so that it can secure cargo space at a decent rate before the prices climb to the maximum for immediate deliveries. Besides Vietnam, COVID is also affecting Cambodia which poses complications on the land-air shipments through Saigon and Bangkok.

In a nut shell, the lack of sea cargo, COVID-19 based factory shutdowns in Asia and the increase in air freight charges will affect the availability of goods for the consumers on time. This calls for the consumers to immediately secure the goods that are currently available in order to avoid paying humungous amount of money for commodities because of air cargo. Consequently, it’s better for a hospital to buy all the PPE they need right now to get through until Spring 2022 and pay the warehouse for storage, than to hope and pray a maritime delivery arrives as you watch your glove supply dwindle to a critical stage.