Category

Emergence Of COVID - 19: Impact On Logistics Industry

Published: Dec 2020 | Report Code:  KSI061614009 | Pages:  112

The Logistics Industry viewed as an auxiliary for trade and commerce enables industries to deliver the goods and services to the ultimate consumers by facilitating mobility throughout the supply chain. The supply chain disruptions in the COVID-19 outbreak had a direct impact on the logistics industry with detrimental factors as labour shortage, fragmented supply lines, weak infrastructure, and ambiguity with respect to the rules and regulations for mobility of goods.

In the pre-COVID-19 scenario, the Logistics sector is pivotal to the global manufacturing industry which is elusive and scattered across the globe to urban to rural remote areas. For example, automotive companies such as BMW operates at the global level with 31 production and assembly sites across 15 nations with sales network spanning across 140 countries. So, to maintain the supply of such capital-intensive goods globally, the logistics sector must be streamlined and efficient.

In Covid-19 scenario, China being the most affected global manufacturing hub has spread operational difficulties across the globe during the initial stages. The supply chains disrupted for the companies having manufacturing facilities in China and the overall trade i.e., exports of manufacturing goods and imports of agricultural commodities to and from China declined. The receding supply for components manufactured in China for other industries was affected too. The contagion halted the cargo ports, shortage of labour of loading/ unloading, carriers were docked. Gradually, Automotive, Electronics, Medical supplies affected. As per the World Bank Reports, In China between January and February, the trucking sector volumes under logistics fell below 15% to that of 2019 levels before showing recovery signs in March. The revival was associated with relaxing of lockdown norms and government actions towards logistics industry.

Apart from China, Logistics holds major share of employment in emerging markets such as India and is considered as the barometer for gauging economy as it plays vital role in driving inflation, GDP, and employment status. With the onset of the pandemic, the panic buying on the market floor had shown peak in the logistics traffic. The heat of the pandemic leading to travel restrictions, flow of goods, social distancing norms at warehouses etc. has led to the decline in the logistics activities. For instance, in India the outbreak led to shortage of drivers which resulted in containers piling up, in ports around Chennai, Maharashtra and other ports.  

The pandemic has exposed the limitations prevailing in the industry such as lack of health security and protection for the workers at dock stations and drivers facilitating trucking deliveries, the debt burden piled up due to which logistics companies lost the recurring cashflows to undertake the operations.

Impact on Logistic Industry segments

As per IFC reports on logistics Industry, under ocean freight the container volumes at Chinese docks declined by 10.1% in first quarter of 2020. The brunt has been suffered by both exporters such as Brazil, China, India, and Mexico, and importers such as European Union. The scenario depicted weak demand for the routes between Asia and Europe, United States and Latin America. However, the land logistics remained operational with minimalistic use for supplying essentials such as medicines etc. This also increased dependence on trucking sector which could not meet the demand and eventually truck logistics soared up. On the other hand, spot road freights rates have taken decline with falling demand from manufacturing sector. Considering the limitations across various modes, railways transport demand seemed favorable. Air freight operated solely for government necessities and working with low volumes exorbitantly raised fares.  

For instance, In South Africa, the pandemic has impacted companies like Transnet which only had half of its workforce operating, in order to maintain the operations, the firm undertook the deliveries leaving profit margins to protect reputational damage.   

Challenges to Logistic Industry due to lockdowns 

Supply chain disruptions have led to delay in deliveries, traffics, surge pricing etc. However, the impact is volatile and unequal as ecommerce shipping at intra-region level has seen upward shift with increase in online transactions while those which facilitated through offline networks have taken a setback.

The impact has been seen on unorganized trucking businesses as they don’t have structured path to follow for recovery. Lack of technology and burden of adhering to preventive measures have led to collapse of the small trucking logistics firms. As per the IMF report, the effect of the pandemic is expected to cast an exaggerated impact with 3% contraction in global economy. The expected downfall in the economy will be a blow to the industry demand for logistics, manufacturing, and the demand for the goods.   

Measures for the revival of Logistics Industry

Supply chain disruptions have led to delay in deliveries, traffics, surge pricing etc. However, the impact is volatile and unequal as ecommerce shipping at intra-region level has seen upward shift with increase in online transactions while those which facilitated through offline networks have taken a setback.

The impact has been seen on unorganized trucking businesses as they don’t have structured path to follow for recovery. Lack of technology and burden of adhering to preventive measures have led to collapse of the small trucking logistics firms. As per the IMF report, the effect of the pandemic is expected to cast an exaggerated impact with 3% contraction in global economy. The expected downfall in the economy will be a blow to the industry demand for logistics, manufacturing, and the demand for the goods.  

Supply chain disruptions have led to delay in deliveries, traffics, surge pricing etc. However, the impact is volatile and unequal as ecommerce shipping at intra-region level has seen upward shift with increase in online transactions while those which facilitated through offline networks have taken a setback.

The impact has been seen on unorganized trucking businesses as they don’t have structured path to follow for recovery. Lack of technology and burden of adhering to preventive measures have led to collapse of the small trucking logistics firms. As per the IMF report, the effect of the pandemic is expected to cast an exaggerated impact with 3% contraction in global economy. The expected downfall in the economy will be a blow to the industry demand for logistics, manufacturing, and the demand for the goods. 

Segmentation

  • By Mode
    • Ocean
    • Land
    • Air
  • By Application
    • Industrial
    • Retail 
  • By Geography
    • Americas
      • USA
      • Others
    • Europe Middle East and Africa
      • United Kingdom
      • Germany
      • France
      • Others
    • Asia Pacific
      • Japan
      • China
      • Others

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