How the COVID-19 Pandemic Has Affected the Shipping Industry
Reflecting on COVID-19
As we reflect on the impacts of the COVID-19 pandemic, this spring and summer seem like a turning point in recovery as restrictions ease across the world. It’s the perfect time to pause and consider how the world has changed and how it will continue to change.
As a highly specialized freight forwarder, part of our job is to take the hassle out of transportation. Through a year of uncertainty, fear, and change, Point Global Logistics was able to help keep the world moving, even when the pandemic left many industries at a standstill.
We are well-accustomed to dealing with uncertainty, as the freight-forwarding industry is constantly evolving. The shipping cycle is an economic process that determines the cost of shipping, influenced by social, political, and economic factors.
The pandemic has complicated the supply chain and caused shortages of certain products. As the supply chain rebalances, we understand that the effects of the pandemic are still present. We are doing everything we can to make this transition back to normalcy as smooth as possible.
So, what is the shipping cycle, and how does it work?
The Shipping Cycle
The shipping cycle is a concept that explains how shipping and freight-forwarding companies respond to supply and demand. The four stages of the shipping cycle are based on customer demand and are trough, recovery, peak, and collapse.
- Trough. The first stage of the shipping cycle begins with an excess capacity. There are plenty of ships ready to transport goods arriving at ports, while others still carrying goods slow down on shipments to save fuel costs. Freight costs start to decrease.
- Recovery. The second stage occurs when supply and demand begin to fall into equilibrium and freight charges start to increase. Shipping containers begin to move out of ports as demand increases.
- Peak. The third stage happens when shipping freight rates become high. The levels of supply and demand are almost equal at this point. Most of the shipping fleet is in operation.
- Collapse. The fourth and final stage is when supply levels begin to exceed demand. Freight rates start to decline, and shipping containers start to line up to ports again.
This cycle thus repeats itself. In an industry where the market is highly variable, Point Global Logistics differentiates itself by offering our clients a level of service previously unseen in the industry. We pride ourselves on providing a seamless integration of supply chain solutions to tackle even the most complex problems. To learn more about our services, click here.