The Transport and Logistics Industry was already seeing a slump in demand towards the end of 2019 because of the Chinese New Year. However, little did we know that a pandemic like COVID-19 would hit the industry at so many levels. Unlike other badly hit industries, the transport and logistics industry has a peculiarity; at the onset of the pandemic, business came to a standstill. While the world was on lockdown, and frontline workers and victims were battling the COVID-19 virus, there was increasing demand for supply of essentials- from both the crisis areas as well as the citizens locked down at home. The International Air Transport Association (IATA) had renewed its call to governments to take “urgent measures to ensure their vital air cargo supply lines remain open, efficient and effective.” Companies like FedEx and C.H. Robinson are considered essential businesses and have their fleets operational for medical supplies. Now, as we see a slightly better picture, we can observe changing purchasing patterns; turning to online shopping even for groceries, and last-mile delivery services have become the need of the hour.
The industry has learned some important lessons on anticipating and tackling pandemics of this intensity as it came across multiple challenges-
Intermediate changes to policies: Customers are reviewing receiving capability of their shipments at destinations owing to local restrictions. There are changing lease terms for temporary warehouse arrangements.
Stockpiling of Consignments due to traffic restrictions: Restrictions on routes, drive and rest times for drivers, and type of goods are causing choke-ups at airports, seaports and warehouses.
Employee fulfilment Disruption: We saw an initial lay-off of employees and truck drivers as the whole supply chain was disrupted. Subsequently, there was a lack of workforce in the last-mile to fulfil increased demand for delivery of essentials.
Pressure on earnings and liquidity: Companies are unable to identify where the cash is locked up. Payments are on hold, refunds are not being processed quickly and there is a fall in their share prices.
Poor Customer Experience: There is not enough support staff to cater to an increasing number of queries on consignments and parcels. The complaints and dissatisfaction led to increasing willingness of customers to change partners.
In order to avoid impacts of this scale, companies are adopting resilient solutions-
- Having alternative suppliers onshore or nearshore in order to avoid international transit restrictions and quick supplier onboarding solutions
- Extensive use of advanced analytics to mitigate repercussions of uncertainty in demand
- Establishment of clear communication channels across the value chain to implement speedy recovery
- Creating ready-models to analyze and identify areas in logistics channel where cash is locked up
- Activating Work From Anywhere solutions for employees or as a minimum to critical staff
- Frequently update contingency and risk management plans
A hero rising out of this pandemic is the local third-party Logistics (3PL) company that bigger giants can rely on. The big giants’ trusted partners had shut shop during this crisis. These 3PL companies have been able to mobilize warehouses, distribution channels as well as the required workforce rapidly. There is increasing dependence on them, now that they have proven their resilience.
This “quickly-recovered” industry is now looking towards digitization of their operations. Use of AI technologies in warehouses; robotics to triage consignments, and drones for last-mile services are no longer far-fetched ideas. AI-based analytics and platform solutions for non-core operations such as workforce management, contract management, and working capital management are gaining visibility. Not only are companies on the lookout for advanced solutions, they are also ready to invest in smaller and quick-to-implement ones to improve operational efficiencies in the short term. Firms are reaching out to third-party experts to partner with them, and create robust solutions and global best practices together. Looking at the pace at which these connects and deployments are taking place, the transport and logistics industry might be leading in the road to complete recovery and seeing the boon in this bane.