Published On: Mon, Jun 29th, 2020

COVID-19 Impact on Supply Chains Serving Isolated Locations

Victor Restis Contributes Commentary on Shipping Challenges

The commercial shipping & trade industry has been tested in the wake of the COVID-19. Before the pandemic, most people didn’t think about how products end up on the shelves of retail and grocery stores. They didn’t give much thought to the millions of people and many systems that make up the global supply chain that delivers essential products into the market around the world. Not until scarcity levels reached critical mass and consumers were limited in the number of supplies they were able to purchase.

photo/ Miguel Á. Padriñán

From crude oil to hospital PPE to commercial cleaning products and toilet paper, COVID-19 has highlighted the importance of how products are manufactured and the supply chains that move them.

The dry bulk sector, which was already experiencing a heavy recession, was affected the worst bringing rates to a historical low,” said Victor Restis, president, Enterprises Shipping & Trading S.A. “For the wet cargoes, the low oil prices have led the market into a rally. This rally will not continue for a very long period of time, nevertheless I believe that the wet market will not be seriously affected by the effects of the virus.”

Though there were strains placed on international supply chains, it could have been much worse, and in many areas of the world that are isolated, supply chains remained strong. The U.S. state of Hawaii is one of those places.

Hawaii is located in Polynesia’s northernmost group of islands within the Central Pacific Ocean and is known as the Paradise of the Pacific. In early March, the state received some grim news about how the global pandemic, COVID-19, would affect its economy. Hawaii relies on a delicate balance of several industries working fluidly to maintain a healthy economy, tourism and the state’s import and export shipping trade are near the top. 

The isolated chain of islands sits in the North Pacific Ocean, about 2,500 miles from the nearest port on the coast of California, which makes the task of transporting goods to the islands a complex, costly, and timely process for companies operating there. Honolulu Harbor is one of the largest container handling ports in the United States, processing over eight million short tons of cargo annually. Apart from serving the mainland U.S. and the other Hawaiian Islands, Honolulu Harbor is also a significant shipping link between Asia and the entire Pacific Rim. 

In total, there are ten commercial harbors on six major Hawaiian Islands – Oahu, Maui, Molokai, Lánai, the “Big Island” of Hawaii, and Kauai. The supply chain, therefore, comes from the U.S. mainland, arrives (in the majority) in Oahu, then makes its way to the outer islands via inter-island barge for their final destination. 

Fortunately for Hawaii, there was some good news amidst the adverse effects of COVID-19 that eased tensions. Despite fears and household food insecurity, imports of goods from the continental U.S., including mainland food manufacturers, were not experiencing production issues, and supply chains remained healthy, active, and not at risk of failure.

Approximately 80% of world trade (goods) volume transports by sea. According to the United Nations Conference on Trade and Development, China is home to seven of the world’s top ten busiest container ports and has experienced mass disruptions leading to profound impacts on the world as a whole.

In the early days of the virus, ports in China, Hong Kong, and India were the first areas hit hard by COVID-19’s uprising and global spread. For isolated areas like Hawaii, their sister-states on the mainland were able to make up the difference. U.S. suppliers assured Hawaiian officials that although some packaged food items were facing disruptions from China, they were able to continue uninterrupted shipping due to adequate supplies. Overall, it was reported that freight carriers did not have any issues maintaining routine services with no drops in cargo volume to the state.

“Although the Market was affected, the demand was there but it was suppressed waiting for the next day,” said Restis. “The demand that has been accumulated during the period that the virus spread across the globe will cause a slightly faster climb and it will reach the pre- COVID-19 days easier since the rates at the said time were not that high anyway.”

As the Hawaiian Islands is just one example in the importance of supply chain management and the strength of international shipping & trade, hundreds of nations and island-locales around the world did not suffer from much-needed food and supplies. Though the shipping industry was tested, it delivered, and we learned more about how to strengthen all touchpoints further to continue serving all people of the world.

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