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When I first began planning this article, the most significant impacts of COVID-19 were primarily limited to Mainland China. It’s probably fair to say that, at that time, few governments were seriously considering the possibility of a pandemic on the scale that now exists.



Now the entire freight transportation industry, across air, ocean, road, and rail sectors, is awash with disrupted expectations and has retreated into survival mode.



Rather than abandon the idea of updating you on trends emerging in the industry in 2020 and likely to deliver changes in the next two or three years, I thought I’d go ahead with it, and add some insights into how the Coronavirus crisis is accelerating or reversing them.

Let’s take a look then, at each sector in turn, starting with air freight.


Air Freight Transportation Trends 2020


The Freight Rate Roller Coaster

In the two years or so before 2020, capacity growth had been outstripping the rate at which demand was rising, keeping air freight rates down. At the beginning of this year, all expectations were for rates to remain flat, perhaps even making air freight a viable alternative to ocean shipping for companies that wouldn’t ordinarily consider the option. The pandemic has changed all that.

As countries closed their borders, airlines cancelled flights en masse. At a glance, you might expect these moves to have little effect, as lockdowns and fear of the Coronavirus don’t exactly enamour people toward international air travel.


But of course, freight still needs to move, and for some commodities, such as personal protective equipment, a rapid supply chain is more critical now than it has been in many decades.



Given that more than half of all the world’s air freight travels in the holds of passenger airliners, the loss of all these flights has devastated capacity, demand has skyrocketed, and rates have soared.



Record Capacity Declines and Price Increases

Year-on-year capacity declines are significant, to put it mildly. Below are the statistics as provided by Seabury, and reported in a Flexport article in mid-April:

  • Capacity from Europe to North America is down by 52%
  • Capacity from Asia Pacific to Europe – down by 30%
  • Capacity from Asia Pacific to North America – down by 17%
  • Intra-Asia capacity is down by 35%

In addition to pushing air freight prices up to record levels, the capacity drain, along with the direct impacts of COVID-19, has prompted ground handlers in some regions to impose emergency support surcharges. These moves have further hit shippers of commercial goods in the pocket at a time when many are fighting to stay in business.



How Have the Carriers Responded?

Many airlines have taken unprecedented measures to create space for shippers’ air freight in response to the loss of wide-body belly capacity. These steps are reactive, and unsurprisingly, in some cases, drastic. They include:

  • Adding more freighter flights on longer routes
  • Decreasing the time that freighters spend on the ground
  • Postponing maintenance (a worrying trend in terms of aviation safety)
  • Bringing old equipment out of retirement
  • Using passenger airliners to provide cargo-only services



Prognosis: How Might Rates Trend Going Forward?

Experts see either of two potential scenarios influencing the air freight rate situation in the second half of this year. In one, demand for passenger services will remain low, with countries easing travel restrictions at different paces, and many people too cautious to consider air travel.



In this case, there will be no sharp rebound in the volume of passenger-airliner capacity—which means no significant increase in cargo space. Rates, therefore, will remain prohibitively high.



In the other scenario, many shippers who typically look to aviation for freight transportation will switch to ocean freight, a trend which, combined with a drop in consumer demand due to depressed economies, will shrink the market exponentially, in which case rates will fall.

Of course, this is pure speculation, and in this time of total uncertainty, any number of other scenarios might unfold. Indeed, it’s likely to be a turbulent year for air cargo carriers and freight-forwarding specialists everywhere.



Ocean Freight Transportation Trends 2020


Ocean Freight Gets Greener, Costlier, Smarter… And Scarcer

The beginning of 2020 saw the implementation of the International Maritime Organization’s IMO 2020 regulation, effectively banning ships from operating on fuel with more than 0.5% sulphur content. The legislation aims to reduce sulphur levels in the atmosphere, lowering the risk of respiratory conditions such as asthma.


The High Cost of Sustainable Shipping

In efforts to comply with IMO 2020, some ship operators are investing vast sums in converting vessels to alternative fuels, such as liquefied natural gas (LNG), or installing scrubbers to remove sulphur emissions. Others are incurring the additional operating expenses involved in using costly low-sulphur fuel.



With ocean shipping responsible for 13% of humanity’s sulphur emissions, the legislation is undoubtedly laudable in environmental terms, but will surely raise the cost of ocean freight shipping.



Carriers are passing costs on to customers by way of new environmental surcharges, and fuel costs have become more volatile.


COVID-19 Slashes Capacity, Increases Freight Rates

It’s not unusual for ocean carriers to announce blank sailings (canceled voyages) to keep freight capacity in demand and prevent sliding rates. However, this year, the Coronavirus pandemic has created havoc in the industry and resulted in unprecedented curtailment levels.



Coronavirus has slashed demand in some regions, increased it in others, created labor problems in ports, and upset the balance of shipping container availability.



Hence, on top of environmental surcharges, carriers are implementing general rate increases and applying other extraordinary fees to recoup costs. Their measures include equipment imbalance and peak season surcharges, all of which make it even more expensive for shippers to keep their supply chains moving.

Additional charges and service cancellations don’t only mean that shippers must pay more to move their ocean freight—first, they have to find available space.



Blank sailings feature to an almost unimaginable degree on carrier schedules, while port congestion in China, and to a lesser extent elsewhere in Asia, is creating long waiting times for export cargo.



Some carriers are practicing slow steaming, and routing westbound vessels around the Cape of Good Hope, creating longer transit times and less predictable delivery arrival dates. These modifications add to the pressures for commercial shippers.

Digitization is Surging

Even without the global explosion of a virus to highlight the limitations of manually operated transportation, the ocean shipping industry was making headway in the use of digital technology to reduce costs and improve reliability.

2020 was looking like a big year in maritime digitization, with the world’s first autonomous container ship scheduled for delivery and commencement of manned trials, before transitioning to fully automated, un-crewed operations in 2022.



Now the Coronavirus has thrown the benefits of autonomous transportation into stark relief. Businesses in every transport sector have had to scramble to minimize human contact.



Companies like Amazon and Walmart are actively planning to increase the use of robots in reaction to the limitations created by social distancing. Moreover, pundits suggest that the pandemic will accelerate the pace of digitization and automation.

Smarter Shipping Steams Slowly, But Surely, Ahead

Typically a slow process, digital transformation is picking up the pace through sheer necessity in many industries, including ocean freight shipping. Many of the world’s port operators are increasingly applying their digital capabilities to solve workflow issues arising from the crisis.

When the threat of COVID-19 subsides, ports and carriers are unlikely to step back into manual processes, having superseded them with digital tools. Instead, many will want to keep up the technological momentum, to be ready for any future waves of this virus, or the emergence of the next one.

Ironically, the autonomous Yara Birkeland container ship project is currently on hold due to the pandemic, but doubtless, efforts to prove the concept will redouble as the situation abates.



Road Freight Transportation Trends 2020


Truck Platooning Tests Prove Positive in Europe

Full automation in road freight transportation is likely still a long way off, as I’ve suggested before in my discussions of logistics and supply chain trends. However, one concept that I’ve also discussed and which can be applied in either a fully or partially automated manner is truck platooning.





Platooning is the joining of two or more trucks in convoy, linked together by automated support and connectivity systems. The lead truck in the platoon is operated by a human driver, who has traditional levels of manual control over the vehicle.

The trailing trucks may also have drivers, but they act more as passive operators, while their vehicles manoeuvre automatically in accord with the lead truck.


The Advantages of Platooning

Platooning has several potential benefits over conventional truck operations, including the ability to:


  • Reduce fuel consumption and emissions, by minimizing air resistance for the trailing trucks
  • Increase safety, as the support systems react much faster to change vehicle direction and speed
  • Improve driver productivity, as the drivers of the trailing vehicles may be able to perform tasks other than driving, such as administration and customer communication.


Extensive tests conducted in Germany have been instrumental in creating positive sentiments among drivers, and globally, fuel savings from platooning have ranged from 3% to 7%. Over the next 12 months, much more testing is expected, along with technology refinements to improve the sophistication of links between platooned trucks.


Platooning: Will the Pandemic Make or Break It?

While the road freight industry waits for true trucking automation to save it from driver shortages and rising labour costs, platooning is a concept continuing to gain favour, with 2020 mooted to be the year in which it makes significant strides.

It remains to be seen whether those expectations will be undermined or exceeded by COVID-19’s presence and the search for contact-reducing models of transportation.



Rail Freight Transportation Trends 2020


Rail Operators Benefitting From Air and Ocean Freight Difficulties

Without dwelling further on the problems besetting the air and ocean freight sectors, suffice to reiterate that both are suffering from capacity issues. In some parts of the world, this appears to be of benefit to rail operators, particularly, for instance, those who can move cargo over intercontinental divides, such as between China and Europe.

It’s perhaps not surprising that shippers who might typically take advantage of ocean freight, are instead opting to send their goods by train. After all, rail freight is considerably faster, especially given the transit times involved with shipping around the southern tip of Africa, which, as mentioned, is currently the preferred route of many maritime carriers for services from Asia to Europe.

That the rail sector is bucking the trend in falling freight volumes, is evidenced in statistics released by China National Railway, claiming a 24% year-on-year increase in freight carried between China and Europe during the first three months of 2020. In April, Westbound volumes rose by 58% and Eastbound by 29% compared with the same period in 2019.


The Rail Advantage for Overseas Freight

While the attraction of rail freight may be hard to resist for shippers exporting across connected continents, the current difficulties of air and ocean shipping might even see importers and exporters in Australia, New Zealand, Indonesia, and the Philippines switching to intermodal containerized services.

By using shorter ocean routes to or from China, and rail segments across mainland Asia and Europe, it’s conceivable that goods’ transit times can be cut considerably for shipments moved between these nations and partners in Europe, compared to those required for ocean freight.



Rail capacity might also be exploited to avoid delays arising from blank sailings, cancelled flights, and seaport congestion.



Is it possible that the Coronavirus pandemic can drive a resurgence in the global use of rail freight? At this point, it seems to be doing so, and it will be interesting to see how the trend responds when sea and air freight finally return to some semblance of normality.



2020: An Unexpected Milestone Year for Freight Transportation

I’m rather glad that I didn’t get around to writing this article back in January, as I had hoped to do, since the events of the year so far would have made a mockery of any hesitant predictions that I might have dared to make. As it is, I won’t dare to make any, which is a promise I might have failed to keep in any other year.

Instead, I can only join you all in watching, waiting, and seeing things unfold, practically on a week-to-week basis, as 2020 continues to give us a roller coaster ride.



Whatever trends were in evidence a few months ago are now either reversed or accelerated, and in emerging from the COVID-19 crisis, may continue to swing up and down—or not.



Whether your company’s supply chain depends on air, ocean, road, or rail freight, or all of them, though, you won’t want to take your eye off the transportation landscape this year, because it’s one that’s pockmarked with peaks, canyons, and blind curves, and subject to shifts of a seismic nature.

Throughout it all, Logistics Bureau is here to help you work effectively with your freight partners to keep your supply chain moving, so please don’t hesitate to get in touch with us for assistance with your transportation and logistics challenges.


Contact Rob O'Byrne
Best Regards,
Rob O’Byrne
Email: [email protected]
Phone: +61 417 417 307
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