COVID-19 Revamps The Logistics and Supply Chain Industry
Consumer demands have changed drastically since the pandemic struck, which has impacted the way goods are shipped and transported.
Manufacturers are struggling to keep up with the increased demands of selected products such as disinfectants, medical supplies, groceries, and paper goods. This has further caused operational bottlenecks in the pipelines, resulting in delivery delays and congestion. Increased demands have spiked freight rates too.
However, not all segments have been impacted equally. For instance, online shopping of essentials has increased the burden on e-commerce companies, but companies that serve the restaurant and event industries have seen dramatic declines in demand.
China, a major consumer of global commodities and agricultural products, was the first to shut its borders and impose lockdowns due to the virus. Manufacturing disruptions in China echoed across entire global supply chains, resulting in the shortage of a variety of products. This impacted global manufacturing operations in automotive, electronics, pharmaceuticals, medical equipment and supplies, and consumer goods industries.
While Chinese manufacturing saw an uptick by the beginning of March ‘20, the situation worsened across the rest of the world.
While Chinese manufacturing saw an uptick by the beginning of March ‘20, the situation worsened across the rest of the world, prompting lockdowns and an inevitable breakdown in freight movement. The additional protocols deployed contributed to further bottlenecks for the freight industry. The industry observed its impact on the freight capacity management of three critical global transportation segments—ocean, land, and air.
The demand for ocean freight increased, causing container shortage in Asia-Pacific lanes. Freight rates skyrocketed as carriers dictated the market. Further, container shortages became the cause of several rollovers in Europe, resulting in significant overall delays in the holiday season. The decreasing port efficiency and increasing demand ultimately resulted in port congestions and bottlenecks.
In the present-day scenario, air freight plays a critical role in the distribution of Covid-19 vaccines.
Similar effects were observed in air freight, where unstable inventories and container shortages further increased demand already pushing new highs due to increased consumer demand. Air carriers retrofitted passenger planes to carry cargo inside the cabins and transport lightweight, essential items such as masks and other personal protection equipment. In the present-day scenario, air freight plays a critical role in the distribution of Covid-19 vaccines.
Even during uncertain times, trucking remained a modality that stayed operational across the globe—except in countries under severe lockdowns. Accumulating regular demand and additional demand for services, especially food and medical supplies, strained truckload capacities. Covid-19 related restrictions reduced employee availability. The surge in demand and tight capacity availability resulted in higher freight rates.