The Covid-19 crisis continues to impact both supply and demand across national economies. Crucially, the pandemic is also affecting the supply chains that link economic enterprises together. Social distancing and hygiene measures are disrupting workforces and workflows, whilst border closures and restrictions to trade are filling ports and warehouses with unmoveable cargoes. In this article, members of CILT North America analyse the effect of Covid-19 on businesses, logistics and supply chains in their region.
Short Term Impact
The Canada-USA border is the largest undefended border in the world and has been closed since March 14th, 2020 to non-essential travel. Trucks carrying medical supplies, food and food products, pharmaceuticals and the like have been permitted to carry goods across the border. In actual fact, the two governments have allowed trucks to cross the border carrying most goods to help keep the economy moving. However, trade between Canada and the USA has experienced a dramatic downturn and the numbers of trucks crossing the international border since March 14th has dropped by 22%.
There are no airlines operating international flights between the two countries with the exception of cargo aircraft. Airports across North America are experiencing significant losses of flights for people. Special international air cargo flights have taken place to bring medical supplies such as PPE and pharmaceuticals.
On the international trade front between North America and the world, ocean container volumes to North American Ports have dropped by 17% to 25% over the past 3 months, and ocean carriers have reduced sailings to and from North America. This has impacted rail volumes in North America as well.
There are significant layoffs of truck drivers and airline staff, but e-commerce trade has risen so international couriers like UPS and FedEx have increased volumes of cargo they are carrying across borders. Goods are still moving but overall trade volumes are down significantly.
Long Term Impact
Cross border trucking volumes are expected to remain down for the foreseeable future, causing bankruptcy in trucking companies and huge unemployment across the trucking industry in Canada and the USA.
Ocean carriers have reduced sailings to North America by 19% due to the economic downturn in global trade. Until the economy improves in North America and globally, international trade will remain low, and it is expected that countries like Canada and the USA will promote greater control of domestic manufacturing, especially medical equipment and PPE which were being imported prior to the pandemic. Now many manufacturers in both countries are producing PPE/masks, ventilators etc. and this could result in a downturn of global trade. Automotive companies have retooled to produce what is needed during the pandemic and expect to continue to do so even when vehicle assembly begins to ramp up.
Canada has always been a trading nation very dependent on efficient, cost-effective supply chains, and despite the fact that exports have been significantly reduced, it is expected they will gradually increase as the economy improves.
This is an example of industry analysis from North America which we are sharing as part of our global best practice resource to help you think about and determine appropriate responses locally.