The coronavirus pandemic continues to rage the world further, despite our expectations that it will be over in a few months.
We have to adapt to life in new conditions. For some it is easy, for others it is incredibly difficult. The same applies to sectors of the economy. Some industries, such as logistics / shipping, pharmaceuticals and e-commerce, have been able to adjust to the prevailing conditions and effectively double their business, and some have collapsed during the COVID-19 pandemic.
The logistics industry, despite all the tests, has remained quite strong and can be confidently ranked among the winning industries during the COVID-19 pandemic. Of course, not all areas in this industry have managed to survive and maintain their positions. In some countries, passenger traffic (by plane, train or cruise ship) has completely stopped. This has led to the closure, bankruptcy of many companies, or the layoff of a significant number of employees. In addition to passenger transportation, related industries were also affected.
International freight transport, like other sectors of the economy, has experienced all the restrictions that have become compulsory measures due to the epidemiological situation. And since freight transport is an important part of the work of many companies, various industries are facing supply chain challenges such as low production capacity and production volumes at suppliers, shortages of raw materials, problems with delivery times and limited transport capacity.
The logistics industry is considered an important business sector. Essential products were more valuable than ever, making their delivery even more successful. Accordingly, the companies that organize cargo transportation were able to significantly increase their revenues. Also during the coronavirus pandemic, the demand for e-commerce increased significantly, which was an excellent signal for investors.
Development trends of the logistics industry in the post-pandemic time – COREX Logistics research
As the demand for cargo transportation has decreased, the battle for the customer intensifies. This leads to price dumping in the freight market.
Many companies are no longer able to withstand prolonged dumping and all weak players will soon leave the market. It is safe to predict a further increase in the number of bankruptcies, mergers and acquisitions that are already taking place in this industry.
Joining forces, its services allows companies to strengthen their joint positions through jointly developed complex offers for clients.
Do not update, but repair
90% of airlines now refuse to renew their fleets, so the demand for their repair and maintenance is sharply increasing. Therefore, vehicle fleets will become obsolete, and aircraft manufacturers will face a further decrease in the number of orders.
The demand for groupage cargo shipments will grow, since this type of delivery allows both senders to significantly save money and carriers to use vehicles as efficiently as possible.
Land freight transportation
An increase in overland traffic is expected, especially on Asia-Europe routes, as air and sea transport rates are now highly volatile. It is worth noting that the boom is expected specifically for rail freight, because international road transport is now complicated by numerous checks and quarantines. In addition, the decrease in the number of passengers allowed to increase the number of freight trains in the schedule for running.
Domestic cargo transportation
If earlier many countries relied on international exports and imports of goods, now, when the number of international freight flows has significantly decreased, manufacturers in many countries will try to satisfy the existing demand on their own. This will give an opportunity to develop internal logistics and improve the quality of services provided within countries.
It is relatively easy to adapt to new conditions and survive the crisis for companies that work on the last mile – that is, those that work at the last stage of delivery of goods in the supply chain. These include road freight companies and operators who operate the last mile. Freight forwarders will also be able to overcome the crisis, since they work without fixed assets.
The coronavirus pandemic is teaching people to limit contact with people and keep visiting crowded places to a minimum. Therefore, the winners will be those companies that offer contactless delivery to their customers. Many buyers are now willing to pay 5-10% more of the actual cost if the order is delivered within 1-3 days. The demand for the delivery of FMCG goods will be especially noticeable.
It is possible that delivery by drones and drones will soon become familiar and popular. For example, online giant Amazon has already received permission to deliver goods by drones to the United States. The delivery will be carried out by MK27 drones with vertical takeoff and landing. They can transport parcels up to 2.2 kg in about half an hour. The radius of their action is 12 km from the warehouse. Prior to that, such permissions will first receive the Wing Aviation service, owned by the Alphabet holding company (which owns Google), and then the UPS express delivery division.
The COVID-19 pandemic has led to the fact that optimization and digitalization, which many companies have been talking about for a long time, but the matter did not go beyond words, finally became vital to continue operating in a crisis environment. A real IT revolution has now begun in logistics. Non-core processes and services are outsourced, and many employees are successfully transferred to work remotely.
Companies participating in the logistics services market are massively moving to new models of business processes, management and production methods based on information technologies. All information required by cargo owners is fed into smartphones. More and more digitalized logistics platforms are emerging that allow customers to order transportation online and also monitor every stage of cargo delivery.
As the forced practice of holding events online has shown, this format is an excellent solution to ensure the safety of participants, as well as to save time and money. Therefore, the tendency to hold meetings, negotiations, webinars, conferences and other similar events will continue and increase.
Today, companies are required to especially carefully monitor the implementation of sanitary requirements for the disinfection of vehicles and equipment. In the future, this will simply become the norm and thanks to this, companies will be able to claim good orders and customer loyalty.