Post COVID-19 logistics and the e-commerce pandemic
Updated: Sep 1, 2021
The COVID-19 pandemic revolutionised our private and professional lives, often for the worse, sometimes for the better. The road freight industry was no exception: increased customs, workers' shortage and strained demand induced a major shock, which proved to be fatal for some businesses. At the same time, the de-bureaucratization has finally allowed to streamline inefficient processes and fight against the inertia of a sector profoundly linked to old habits. And, as for the overall logistic sector, this pandemic is likely to leave some long-term side effects, among which: the push towards intermodal transport, re-localised supply chains and a solid shift to digital.
Rethinking logistics in troubled times
During 2020, logistic difficulties spread hand by hand with COVID-19: the first impact was in fact experienced in China, the epicentre of the pandemic, where both consumption and production dropped already at the beginning of the year. The consequent lack of Chinese-manufactured components strained the supply chains of most firms around the globe, triggering a harmful domino effect: when the virus spread overseas, increased custom controls and employees’ lockdowns determined multiple logistic bottlenecks.
So, how did we deal with all this?
Mostly, governments tried to avoid supply chain collapse by designating logistic services as essential, thus exempt from lockdown measures. Road freight remained operative too, but many complications (e.g., longer transit times and strained capacity) called for new measures, which both firms and authorities have implemented promptly:
De-bureaucratization: in order to smoothen supply chains and to soften border control, the concept of “green lanes” was introduced in the EU as of March 2020.
Abolition of weekend stops: in the first year of pandemic (namely March 2020 – March 2021) 0 days of calendar stop were implemented, compared to the 25-30 of an ordinary year.
Costly safety adaptation: most companies bore high financial costs to introduce new protocols, such as social distancing, disinfection of work areas and unlimited time off for employees.
Repurpose of activities: many providers adapted their services to the new demand, starting to deal mostly grocery and medical products (e.g., masks).
Even if these measures eased the emergency, they could not prevent the spread of a harsh international crisis, which saw the road freight sector to be partially deserted, in favour of alternative modes of transport (e.g., airlines repurposing passenger flights for cargo). In this scenario, the smaller trucking businesses were the most struck, and those that lacked emergency funds or backup plans often faced bankrupt.
In contrast to the rest: the e-commerce boom
Only one sector seems to have – largely – benefitted from these nefarious times: e-commerce. According to IBM’s U.S. Retail Index, the year 2020 accelerated the shift to online shopping by five years. While smaller businesses were lagging behind the digital transformation, the giants of retail gathered positive results by reinforcing their omnichannel strategies: Walmart’s e-commerce rose by 97% in Q2 2020, while Amazon experienced a 40% sales growth.
And, even if we do not yet know whether this digital shift was solely fuelled by the pandemic or is destined to remain in the long term, we can note how such rapid “e-commerce pandemic” has already disrupted many dynamics of the logistic industry, as we explained in our latest article.
What next? The new normal of logistics
Even if the industry is still experiencing tough times, most analyses hypothesise a positive outlook for the future. And, while many experts foresee that the evolutions born during the pandemic will fade with it, the already existing trends that COVID-19 accelerated are likely to remain with us.
In particular, we can assume that:
New regulations will have to be elaborated to manage the technological shift: as more companies join the freight tech space, governments must guarantee safety and transparency via the regulation of the innovative practices for which laws are still missing, such as truck platooning, digital customs clearance and digital transport documentation, smart infrastructure and drone delivery.
During the sanitary emergency, road and air transport were prioritised for their flexibility and agility, inverting the pre-COVID push towards environmental-friendly means of transportation (i.e., rail and ocean). In the new normal, we can expect a strong thrust towards intermodal travels (especially ocean-rail-road combinations).
Consumers’ preference for online stores will probably consolidate in the upcoming years, so that retailers and logistic services providers will have to swiftly address the multiple challenges triggered by the “e-commerce effect”.
As the pandemic’s domino effect on logistics revealed the fragility of global production processes, many businesses will probably choose to re-localise supply chains, consolidating the reshoring trend.
As restrictions are being lifted across the world, and vaccines promise to bring us the awaited normality, making such conjectures about the future does not represent a mere speculation exercise, but rather a strategic advantage: even if COVID-19 seemed to have frozen the world, it has at contrary accelerated many economic, social and technological trends. So that businesses must now embrace this renovated pace, in order to restart and, finally, recover from this pandemic.