Growth Rate of Logistic Industry is Slowed Down Globally Due to COVID-19

  • Published: July 2020

The global logistics industry exhibited significant growth in the recent past, owing to the ongoing digital transformation across the world. Moreover, the growth in e-commerce demand, increase in the disposable income, and expansion of the consumer base in developing economies have invariantly contributed to the growth of the global logistics industry. However, amidst such a prosperous situation, the emergence of COVID-19 in most of the countries has slowed down the growth rate of the overall logistic industry in recent times.

The Pandemic Has Disrupted the Global Supply Chain

On account of the COVID-19 outbreak across the world, countries have been compelled to temporarily discontinue their trading activities with one another, which has caused a disruption in the supply chain, which, in turn, has adversely impacted the logistics industry. As a result of the lockdown in most countries across the world, economic activities have been hampered, thus hindering the procurement of raw materials, food products, pharmaceutical products, automotive components, and many other essential and non-essential items. Thus, the disruption in the supply chain is a major outcome of the COVID-19, from the point of the global logistics industry.

Last-Mile Logistics Services Are Witnessing Huge Surge in the Partial Lockdown Region

The impact of COVID-19 is also visible in last-mile logistics services. E-commerce giants, such as Inc., Walmart Inc. (Flipkart Pvt. Ltd.), and Alibaba Group Holding Ltd., are facing challenges in terms of the delivery of products. The restriction in the movement of vehicles is causing a delay in the delivery of services through the companies’ contractual delivery partners. This is compelling e-commerce companies to tie up with on-demand last-mile delivery companies, to meet the sudden surge in product demand.

Offline Logistics Services Are Bearing the Brunt of The Coronavirus Outbreak

The impact of COVID-19 on different modes of logistics, including online and offline, has also been significant. As countries are embracing social distancing, as a means to curb the spread of COVID-19, there has been a subsequent shift from brick-and-mortar shopping to online shopping. This has led many people to turn to e-commerce for the purchase of items that they might have otherwise purchased in person. For instance, China, one of the largest markets for online retailing, has witnessed a 10–30% rise in the online spending on essential goods. On the other hand, countries affected by the COVID-19 pandemic have shut down retail outlets, in order to minimize the spread of the disease, which has significantly brought offline-mode logistics services to a grinding halt.

All the Industry Verticals Are Negatively Impacted by the Pandemic

Different logistics-associated verticals, including healthcare, automotive, food & beverage, and retail, have witnessed a varied impact of COVID-19 around the world. The retail industry has almost been on a standstill, as a result of COVID-19, with most of the countries restricting the opening of retail stores selling non-essential items. Similarly, the healthcare vertical has also witnessed a restricted demand. For instance, medical resources, including doctors, nurses, and essential equipment, are being prioritized for the treatment of virus-affected people. There has also been a delay in and cancellation of most of the non-critical medical interventions.

Furthermore, the automotive industry also faced the wrath of the supply chain disruption and a decline in sales; the food & beverage industry has gone in hibernation, with the closure of restaurants and café. Thus, the slowdown caused in different verticals will result in a low demand for logistics services, thereby further adversely affecting the logistics industry in 2020.

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Industry Player Are Framing New Strategies to Ensure Recovery

Amid the pandemic situation, logistics companies are undergoing major tactical changes and framing backup policies to ensure recovery. Once the worldwide lockdown is relaxed, the logistics industry expects to catch up with the demand for goods that have been stuck in the warehouse as inventory. Moreover, with the right strategies to combat the impact, the global logistics industry could bounce back, in the process, creating great growth opportunities for itself in the future.

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.