Operating in a Changed World
Lessons learned during the first wave of the pandemic have served the industry well.
(Article originally published in Nov/Dec 2020 edition.)
When Covid-19 hit in early 2020, countries rushed to contain the infection by closing borders, shutting down industries and restricting movements.
At the height of the pandemic, businesses faced tight lockdowns and factories were closed. But essential services were still allowed to operate. Freight forwarding and logistics functioned with permits as governments realized that, while guarding lives was important, trade and commerce must go on.
The pandemic is not contained. What lessons were learned during the initial wave when countries first confronted the pandemic? How did industries adapt and what lessons were learned? This article explores the experiences of key port operators, logistics companies and industry professionals.
Logistics & Freight Forwarders
In Thailand, industry veteran Andrew Collins says that, “As the pandemic got closer and started infiltrating the country, there were a lot of unknowns. Communications were patchy, and many companies had to make operational changes prior to any real guidance from government bodies.”
The virus had spread quickly in other countries, and employees were anxious and afraid of the unknown. “So it was critical from a management point of view to make sure employees would come to work and feel safe in their working environment,” he adds.
As Thailand has many manufacturing facilities and distribution centers, safe procedures and processes were adapted quickly including temperature checks, contact tracing, compulsory masks, rigorous site-cleaning schedules and social distancing to prevent any infections that could lead to site closures.
In Malaysia, Hiroyuki Shiono, Managing Director of freight forwarder MS Global Freight Solution, noted the shortage of cargo space and extreme rate hikes in air freight due to lockdowns and cancellations. “Countries like India and Saudi Arabia banned flights entirely,” he says, “so cargo got stranded at our warehouse in KUL airport for about a month.”
Only essential cargo was allowed for import and export, and the company’s air and sea freight volume dropped drastically. Oversized and heavy project cargo disappeared entirely. Non-essential cargo was stuck at ports. Manufacturers of non-essential items could not operate until they obtained permits from the government.
“Fortunately, the increased volume of PPE cargo such as masks and gloves was able to compensate for the reduced volume from general cargo,” Shiono notes. “The experience taught us to diversify the cargo and commodities we handle as well as our trade lanes to spread the risk.”
John Stubbings, National Chairman of the British International Freight Association and Group Director of U.K.-based freight forwarder Woodland Group, says the squeeze on air freight and freighter capacity between Europe and the U.S. and outbound from China led to rerouting to alternative airports or offering a combination of air/sea/rail options: “For example, we were offering shipping to Australia from the U.K. via Hong Kong – air to Hong Kong and ocean from Hong Kong to Australia.”
Warehousing facilities were overflowing due to the lack of movement of freight and goods. “We provided services such as “Delay in Transit” solutions to hold up goods at or near the point of manufacture in China and other countries,” Stubbings adds. “We stored goods long-term in warehousing operations or held up shipping containers in off-quay bonded warehousing locations close to major ports and rail terminals across the U.S., the U.K. and Ireland.”
Ports are a critical link in global supply chains, providing key components needed in manufacturing and moving finished goods in international trade. Some ports, like Singapore, play an entrepôt or transhipment role in moving goods from region to region.
Quah Ley Hoon, CEO of the Maritime & Port Authority of Singapore (MPA), explains: “The port is Singapore’s raison d’être. It’s why during this pandemic we continued to keep it open. Not only does it bring food and essential goods to our homes here in Singapore, it also functions as a global transhipment hub to facilitate the flow of food and supplies to people around the world.”
Keeping global supply chains running is an international effort, and MPA worked with more than 50 port authorities from Asia, Oceania, the Middle East, Africa, Europe and the Americas to commit to keep their ports open for trade. MPA also recognized the critical role seafarers play in keeping international trade and global supply chains running and has been facilitating crew changes by providing a “safe corridor.”
“Since March,” says Quah, “MPA has facilitated crew changes in Singapore for more than 54,000 sign-on and sign-off crew of all nationalities from some 3,500 ships of different flags, involving more than 2,900 companies.”
The pandemic has also spurred the digitalization of operations. “In every challenge,” she adds, “there are opportunities. Covid-19 has accelerated our adoption of technology and digitalization. For instance, MPA has accepted the use of telemedicine consultation for doctors to assess if the crew is fit to travel after signing off in Singapore.”
For carriers and shippers that have not adopted smart technologies, MPA, together with the Singapore Shipping Association (SSA) and Infocomm Media Development Authority in Singapore, has developed the Maritime Digitalization Playbook to help companies establish their own digitalization programs.
Ports in Malaysia are doing the same thing. Datuk Ruben Gnanalingam, Group Managing Director of Malaysia’s Westports, says, “We decided to focus on our automation and digitization plans faster as we had more time to spend on it. We hope to come out of this crisis stronger than before.”
He adds, “We have definitely improved on our safety measures, especially those related to infectious diseases. We’ve also been able to update our crisis management procedures and understand our supply chain better. We now know how to make them all more resilient going forward.”
In India, trade was immediately impacted with imports falling 23 percent in the April-September period. Dr. Abhijit Singh, Executive Director of the Indian Ports Association, says major Indian ports took several prompt actions to mitigate the impact of the pandemic and lockdowns on operations and maintain high service levels, including:
- Ensuring storage space for cargo and accommodation and food for migrant laborers working on the docks
- Ensuring the availability of PPE kits and other necessary medical devices and medicines and the sanitization of all workspaces
- Providing isolation and other medical facilities, and
- Coordinating with their respective district and state administrations for the movement of staff, workers and drivers to and from the workplace.
Supply Chain Disruptions
According to Abi Sofian, the former CEO of Northport Malaysia who now runs his own consultancy, Thought Partners Group, the disruptive effects of the pandemic at its height were staggering: “Traditional manufacturing was either halted or downsized. Medical-related manufacturing was rapidly scaled up. Consumption patterns drastically shifted. And all this happened at such a rapid pace that some existing supply chains were exhausted immediately while others became obsolete.”
Mike Yarwood, TT Club’s Loss Prevention Managing Director, further highlights the risks that arose due to pandemic disruptions and how these tested the weakness of end-to-end supply chains: “What happens if there is a disruption? How and where can I secure alternative goods through alternative routes? The global nature of this pandemic has been such that even the best-prepared would have been impacted to some degree.”
Understanding the full end-to-end supply chain became a priority. What are the potential pinch points? Where might your supply chain fail and, importantly, what are the alternatives to ensure the smooth flow of goods through your supply chain?
“The secondary challenge was each of the other countries around the world reacting to the pandemic and introducing various levels of lockdown,” Yarwood adds. “This influenced the supply and demand for various commodities, some spiking (medical supplies) and some dropping significantly (luxury items).”
The industry adapted by using online methods and e-commerce.
“The effects of volatility in volumes was partially offset through the industry being extremely agile,” he says. “Where the volumes of certain commodities fell, others spiked. Freight forwarders and other supply chain stakeholders quickly adapted to meet market demands. The recent prevalence of e-commerce is a good example of how supply chain stakeholders have quickly adapted and embraced new opportunities. It’s also important to recognize that agility comes at a cost and great effort. It’s not simply a seamless transition.”
In the U.S., Sri Laxmana, Vice President of Global Ocean Services at major U.S.-based freight forwarder C.H. Robinson, noted that the pandemic caused disruptions in varying degrees to different types of goods and required both ports and forwarders to adjust their operations.
“It was quickly apparent during the shutdowns that commodities related to restaurants and schools, to name two, were not needed,” he explains. “On the other hand, we saw a spike in DIY (do-it-yourself) materials and e-commerce merchandise due to the majority of the U.S. population working from home and adapting to online learning.”
Although pandemic-related disruptions have decreased significantly since the spring, PPE continues to move robustly via air and ocean. “Furthermore,” he adds, “our team is starting conversations with customers about the upcoming Covid-19 vaccine and its impact not only on the global transportation market but also on their own supply chains.”
When the pandemic first hit, countries and industries were not prepared. With the advent of the second and third waves, the logistics industry and ports were better prepared. Unfortunately, there will still be closures of businesses that barely survived the first wave but cannot endure disruptions from renewed lockdowns. Some of the lessons learned are now part of standard operations in a changed world. They form our new landscape as we move into 2021.
Based in Kuala Lumpur, Philip Teoh has practiced maritime law and arbitration in Singapore and Malaysia for more than 30 years. This is his second appearance in the magazine.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.