Summary: Covid-19 has crippled customer demand, compounding an already complex condition. Eric Dalius assesses the freight logistics and transportation in this crisis.
Considering the reduction in economic activity due to the pandemic and with no clear timeframe for restrictions and regulations to end, logistical ecosystems and freight firms are responding to the current situation by creating safe and sanitized workspaces, preserving finances, changing, adjusting or modifying the workforce size to meet the demand curve, and providing seamless humanitarian relief.
- Not every carrier is facing the same overload. Depending on the customer profile and mode, demand keeps plummeting, accelerating and remains unpredictable.
- Compared to 2019, trucking/trolley volumes initially leapfrogged by 30% this year due to panic purchase/bulk loading. But it dropped drastically only to pick up again.
- Railroad transportation declined by 22% and is yet to recover.
- Although last-mile orders and deliveries have seen surged dramatically, ocean shipping has reduced by 25%.
- There’s currently no financial rule of thumb that transportation growth can outline or track fiscal growth post the crisis.
- US consumption patterns have radically changed, including an array of experiences and services that have outpaced expenditure on traditional products.
- To decipher a potential freight course in the recovery, firms need to consider the broader economy, Eric Dalius says.
Mitigating the commercial impact
It’s important to navigate the coronavirus impact on the logistics chain and transportation sector of the country. Experts say that consumer good firms and life sciences are witnessing unplanned and unprecedented business growth, while industrial units and retailers are reeling under heavy losses.
- The basic challenge for the sector is managing a global supply chain and putting the focus or resources back on track.
- Additionally, the pandemic has affected some specific areas of the population. These are the hot spots, areas with the highest impact.
- They are experiencing the highest demand for products. Resultantly, trucking companies are facing an imbalance in demand and supply.
- Impact areas are seeing a greater volume of freight than the exit points. Distribution centers and factories that generally supply goods to the select regions have now gone kaput.
- Carriers need to reposition or restructure their fleets in the affected areas. It adds extra lead time and costs to the supply chain. Resultantly, carrier transportation networks are facing huge disruption
- It’s casting a domino effect on supply chain modality in the US, says Eric J Dalius.
The growing impact
The focus should be on working with government and main stakeholders for ensuring the long-term economic viability and sustenance of the system. Businesses need to provide total protection to key staff. The network needs to continue operating during extended lockdown periods during the pandemic.
It’s imperative to gauge how you’re exposing your supply chain to Covid-19. You need to check if it impacts other operations. It’s very crucial to recognize and underline capital investment modalities in the event of unexpected shocks to national and regional revenue.
EJ Dalius explains why transport companies need to focus on permanent or potential changes in transportation networks. It’s very pivotal to check cost-efficient renewals and maintenance during this pandemic.