Viktor Shevchenko, Co-owner of ZAMMLER Group of Logistics Companies, informed the readers of LDaily about the situation in the field of international transportation affected by the introduction of quarantine on a global scale.
LDaily: Since the spread of COVID-19, China-related supply chains have been disrupted. How is the company going through this period? How has the introduction of quarantine affected the freight industry in Ukraine? Do you see a slump in demand for your services?
Due to the coronavirus epidemic spread, shipping rates have increased by an average of $150-200/TEU. The leap in prices occurred in March because China began to resume its manufacturing activity. So, the demand for freight shipments increased, a shortage of places developed, consequently, prices improved. Given the situation, there are some delays in the procedure of goods registration at the ports as well — the regime of compliance with sanitary and hygienic safety rules is similar to the one introduced in markets and pharmacies (keeping distances, no more than one person in a room, etc.). Also, some staff work remotely, which does not always involve promptness.
Comparing the current tariffs with those before the quarantine was introduced, it is clear that the cost of transportation of goods from Chinese airports to Boryspil has increased 3-4 times.
80% of all cargo used to be carried by passenger aircraft. However, after restrictions on passenger air travel were introduced in many countries around the world, offers reduced drastically. Freight boards are insufficient to supply all the demand. Therefore, some airlines began to use passenger aircraft to carry medical and humanitarian goods. Moving 1 ton of cargo from the PRC to Ukraine by a charter plane is about 30% cheaper than delivering the same consignment in parts by regular cargo airlines.
International road transport
The international freight traffic situation has changed dramatically during the quarantine period. The tariffs on imported freight were 40-50% higher during the first week after the introduction of quarantine than before. Now the situation with prices has stabilized. Moreover, prices decreased due to lower fuel cost. There was also a shortage of transport due to high demand (the recipients tried to replenish the stocks of goods) at the beginning of the quarantine in Europe. Lots of companies have stopped their work, now all are gradually returning to normal. For example, supplies from Italy have completely resumed, shopping centers have opened, and goods are being actively shipped.
Road transportation in Ukraine
The cost of freight transportation through the territory of Ukraine has not changed due to the epidemic. But during the quarantine, we felt a decline in volumes – if before the decline reached 40%, now it is 15% of the pre-quarantine level.
We haven’t experienced any significant changes in warehouse logistics so far. The cost of cargo storage and handling remains constant. Most of our contracts are long term, so we continue to provide services in accordance with existing arrangements. It wasn’t necessary to somehow reduce warehouse space for us.
One of the current trends is a 10-12% increase in the stock of essential goods (product group, medicines, spare parts, components, mobile communication). At the same time, a stock of goods in other segments has decreased by 15-17%.
We can also notice an increase in demand for Class B and C warehouses on account of lower rental costs in comparison with Class A complexes. Since most ZAMMLER warehouses are Class A, we are now exploring the option of increasing warehouse space through Class B and C warehouses.
LDaily: Ukraine has tightened control at its borders when passing through road crossing points due to the coronavirus threat. Besides the period the cargo stays at the border, what other difficulties have you faced? How much has the border crossing term increased?
V. Shevchenko: Well, if you compare the situation that was at the beginning of the quarantine, and now, it is radically different. Immediately after the introduction of quarantine restrictions, we faced the problem of queues of trucks at checkpoints, delays in customs procedures. For example, on March 23, there was a queue of 800 trucks to leave Ukraine at the Yahodyn checkpoint.
Also, if before the quarantine the journey Kyiv – Warsaw – Kyiv lasted 5 days (including border crossing and customs procedures), and the cost was approximately €1,000 thousand, then at the end of March, this flight lasted 12 days. Now the situation has stabilized: tariffs have returned to their pre-quarantine level, there are almost no queues at the checkpoints, a system of remote document management has been established, and so on.
LDaily: What supplementary measures have been taken by the company to ensure that the delivered cargo is safe for people?
V. Shevchenko: We are constantly monitoring the situation and we are ready to respond rapidly to any changes to provide quality service. Drivers and warehouse workers are given instructions on how to operate properly in the current environment to minimize the possibility of infection.
From the very moment of the introduction of quarantine measures, all employees of ZAMMLER Group offices have been advised to switch to a remote work mode using the electronic document flow to the full. Those employees who are unable to work remotely to maintain efficiency are provided with the necessary protective equipment (disinfectants, disposable masks and gloves). We have simulated several possible scenarios, clearly defined an algorithm for each of them, and acquainted our clients with these algorithms.