Pandemic Gripping Tight, Tough Days Ahead for the Logistics Industry
With the logistics industry enjoying a boom since 2018, the regular picture at shipping docks on working days involved a lot of commotion. People yelling, cargos waiting to be unloaded, trucks roaring, and staff running like crazy from one point to another. Yet, ever since the Coronavirus has been labeled a pandemic and has been spreading like wildfire through the US, the logistics industry has been hit a terrible blow.
The global crisis of the COVID-19 pandemic has forced to take stringent precautionary measures, such as country-wide lockdowns and social distancing protocols across the world, to help prevent the spread of this extremely contagious disease. With businesses following the closure rules, the restrictions on working hours and employee attendance, factories being bound to stay shut, and seaports in other countries inaccessible, the global logistics industry has been the worst hit. Scenes in the US are no exception.
The Doldrum Scenes
The global logistics market crossed a stupendous $4,730 billion in 2018, growing consistently for the past two years. The figures were predicted to reach $6,300 billion by 2024 until things went sideways with the sudden spread of this deadly virus. Now, industries are coming to a screeching halt and the lockdowns are drastically decreasing trade figures.
So, it’s no surprise that the shipyards are now in jeopardy. Arriving containers are stuck at the docks and goods are not being transported due to lockdown rules. As a result, the warehouses are piling up on goods that still need to be exported, while factories have stopped functioning with no raw materials or components reaching them. This situation has forced business organizations and manufacturing units across the world to power down temporarily, resulting in losses worth hundreds of millions of dollars in the shipping and trucking industry. In fact, a recent worldwide survey by Statista reveals that 73% of the respondents have indicated a massive impact on supply chain operations and logistics.
The Fear Factor
According to reports, commercial shipping constitutes 80% of the global trade. This is now affected by the pandemic. The reduced number of vessels on routes connecting China with the US, India, and Canada has already recorded a staggering loss of $350 million in commercial shipping per week. This is mostly due to some of the world’s prominent seaports being located in China and thus being inaccessible at the moment.
The trucking sector is also in a fix, with a combination of reduced supply and sudden spikes in demand. So, it has become essential to use advanced technology solutions, such as a delivery route planner app, to improve efficiency.
The sudden hikes in demand are due to the panic stockpiling of goods by customers and thus frequent refilling of store shelves, mostly in the downtown areas. Yet, the supply chain has restrictions on how much goods can be piled on trucks and the working hours for non-retail businesses. Another problem in the supply chain is the delivery driver shortages in US cities due to the fear of Corona infection. Moreover, the pandemic has restricted travel and passenger flights on the trans-Atlantic route, thereby contributing severe capacity constraints. Some passenger aircraft have been turned into cargo carriers and have taken spot rating shipments at escalating rates.
All this combined, the situation is indeed grim. A survey by the Institute of Supply Management provides a scary image of the logistics business. The findings reveal that around 47% of the respondents reflected a 22% reduction in revenue targets, while 36% claimed a reduction by 27%. The survey was conducted in two parts; the first part at the start of March had over 80% of the respondents awaiting a topsy-turvy in their business due to the supply chain disruptions and the second part saw this percentage jump to 95% in just four weeks’ time.
Worries Ahead?
The current phase is beyond calculation and expectation and there is no assurance that things will change anytime soon. Rather, experts believe that the logistics situation might worsen in the coming days. The huge losses faced by businesses worldwide are predicted to carry forward, creating a massive global recession. The abrupt negative pricing of crude oil is indeed a shocker and seems to be just the start. Yet, at this juncture, the players of the logistics industry surely have nothing to do but hang tight.