COVID-19 Impact Analysis on Logistics Industry

The global logistics industry witnessed tremendous growth in recent years, due to the rising rate of digital transformation across the world. The increasing e-commerce activities, rapid urbanization in developing economies, such as China and India, and rising disposable income of consumers are some of the major aspects creating a high demand for logistics services around the world. However, the emergence of the global COVID-19 pandemic has significantly slowed down the logistics industry growth rate for the time being. With nationwide lockdowns being implemented in most of the COVID-19-affected countries, the logistics industry has witnessed a mammoth decline in demand, along with operational hindrances, thus experiencing an adversely affected industry growth rate.

The disruption in the supply chain has been a major impact of the COVID-19 epidemic across the world. China has its vast supply chain network operational across most of the COVID-19-affected countries, including the U.S., India, Japan, South Korea, Italy, Germany, Spain, the U.K., Hong Kong, and Singapore. Moreover, apart from China, all these countries are also involved in trade activities with one another, for the exchange of varied essential and non-essential goods, including automobiles and their ancillary parts, industrial equipment, mobile phones, and even active pharmaceutical ingredients (APIs). However, as a consequence of the COVID-19 outbreak, countries were left with no choice but to temporarily discontinue their trading activities with one another, which has adversely impacted the supply of goods, thus causing a disruption in the supply chain.

Countries have restricted the number of air, water, and rail cargoes traveling to and from COVID-19-affected countries. Moreover, the carriage of goods has also been restricted to essential items during the period of lockdown, across all modes of transport, namely roadways, railways, airways, and waterways. Even truckers have witnessed hindrances in their movement within a country, owing to the extensive restrictions and permission barriers in different locations. The restricted movement of goods, especially non-essential items, has significantly brought down the overall freight usage across the world. For instance, the U.S., the largest trucking industry in the world, operated at around 82% of its capacity between February 1, 2020, and March 15, 2020.

The offline mode of logistics services was worse-hit by the COVI-19 pandemic than the online mode. During the ongoing pandemic, consumers have exhibited a drastic shift in their buying behavior, with most of them opting for online shopping of essential items, rather than physically traveling to the store. Moreover, countries across the world have imposed a nationwide shutdown of almost all retail outlets for non-essential items, including clothing, electronics, accessories, and automobiles. This has eliminated the need for the transportation of these products, thus causing a massive blow to the logistics industry around the world.

On different verticals, including healthcare, automotive, food & beverages, and retail, the impact of COVID-19, in the context of logistics services, has been diverse. In spite of a steep demand in the healthcare vertical, the supply chain has witnessed considerable delays in the delivery of goods, as well as the need for a strong financial alternative. The automotive industry is one of the worst-hit sectors by the pandemic. Import–export operations across countries have been temporarily halted, owing to the national emergency, which is hindering the supply of automobile components and finished products. Moreover, in most of the countries, manufacturing plants, as well as showrooms, have been closed down, which has affected both the demand and supply sides of the industry.

Same is the case for the retail industry, with countries shutting down retail outlets in order to maintain social distancing. Furthermore, the food & beverage industry has also faced the wrath of the global pandemic, with offline dining venues, such as restaurants and cafes, have been shut down and even online food orders witnessing a decline. Thus, the impact of COVID-19 has been widely visible across all the logistics-dependent verticals around the world.

However, amid the pandemic situation, logistics companies are undertaking major strategic changes and formulating backup plans to aid recovery. Such measures can help reduce the overall cost of services, as operational optimization will be the top priority of logistics companies, once the COVID-19 crisis ends. Furthermore, companies need to view this crisis as a temporary situation and should, therefore, work toward straightening things out with suitable measures, to reduce the overall impact in the coming years.

The major player in the market are Deutsche Post DHL, Kuehne+ Nagel, The Maersk Group, DB Schenker Logistics, C.H. Robinson, Dsv Global Transports and Logistics, Panalpina, United Parcel Service (UPS), and Supply Chain Solutions and Geodis.