The coronavirus pandemic also means unknown territory for the transport and logistics industry in many respects. Logistics companies around the world are making every effort to keep the consequences to a minimum. But just at the beginning there were kilometre-long traffic jams at the borders, production stops and a large number of goods that had to be stored temporarily. One thing has become clear: Companies have to rethink and logistics will not be the same after the Corona crisis.
Nothing seems to be able to stop the coronavirus. Originally from China, the virus still has consequences for the life and daily interaction of people. And in view of restricted zones, company and border closures, it also has an impact on the business world. The transport and logistics industry has maintained basic services for the population, despite adverse circumstances. However, the flow of goods changed rapidly, so that since February 2020 many things have already changed due to the coronavirus and its effects on the transport industry: Fewer products are coming from China overall because production has been cut back in many places. At the same time, supermarkets were bought empty so quickly that they should have been supplied more often. For logistics companies, this meant that they had to change their entire planning and react anew almost daily.
Coronavirus accelerates digitalization of logistics
In the world of work, the corona crisis brought about some drastic changes: Suddenly you see people sitting in their home offices and doing their work from there. This affects both logistics managers on the side of the freight owners and all office staff on the side of the forwarders, such as customer service, dispatchers, sales and finance. This shows that it is possible to keep the supply chain running, and that online tools are actually helpful in doing so. Some large logistics companies, such as DHL Freight, have long been pushing the use of their online tools. But many other large and small transport companies are now realizing for the first time how much more efficient and flexible their daily business can be by using digital solutions.
Shippers are also currently learning to appreciate digital tools. The crisis is like a wake-up call for shipping companies to push digitalisation massively, because the situation relentlessly shows that non-digitised parts of the supply chain process are inhibiting business. Telephone enquiries about freight rates, protracted price negotiations, the need to postpone physical waybills – all this paralyses one’s own business, and in times of crisis this is particularly painful. Digital freight platforms already offer price comparisons between freight forwarders and online bookings at the click of a mouse, as well as completely digitalised end-to-end solutions for the entire transport process.
Based on the experience now gained about the importance of digital technologies for the economy, the transport and logistics sector will also emerge from the corona crisis in a much more digital form.
Diversification of supply chains and more transparency
Particularly at the beginning of the Corona crisis, many companies suffered from the fact that supply chains at logistics hubs were severely slowed or even interrupted. The lack of relevant parts or components for production made it painfully clear to many companies that excessive dependence on a single supplier or various partners from the same region can be problematic in times of crisis. Clearly at an advantage were companies that had already taken care of resilient supply chains before the outbreak of the crisis and had contractually agreed on additional alternative transport routes. In future, the experience gained during the Corona crisis will lead companies to diversify their suppliers for certain goods and services with the same attitude as an investor would diversify his portfolio if he wanted to ensure more stable earnings.
Along with the diversification of sourcing opportunities, it is also essential to increase transparency along the supply chain. The more partners from different regions are used, the more difficult it is to keep track of the situation. With the right level of transparency, however, companies can plan more efficiently, identify potential supply bottlenecks early on and switch to alternative supply channels more quickly.
The big transport and logistics companies such as DHL in particular are then the rock in the surf. Thanks to their international network, flexibility and experience, these global players can ensure that the effects of crises on the world economy are kept within limits.
Ties to large logistics companies
According to the study, companies in the post-Corona period will primarily look for large logistics partners in order to be better prepared for future crises – and with contracts that are as long-term as possible. There will also be a rethink of the principle of just-in-time production on the company side. The aim of Just-In-Time is to save on delivery costs and to optimize ordering processes. Although this principle has made companies’ supply chains more profitable in recent years, it has also made them much more susceptible to disruptions. A problem, as it now turns out. After the Corona crisis, companies could increasingly use warehouses for strategic products that are close to their locations in order to be able to avert a complete production stop with the so important buffer function of a warehouse. Here, too, it is worthwhile once again tying oneself to the large logistics companies, which already have a large number of warehouses at strategic transport points.
In addition to the business strategy issues in transport and logistics, one thing has also become very clear in recent weeks in the wake of the COVID-19 coronavirus: The industry is moving closer together in this time of crisis, finding new and flexible solutions for the delivery of goods and implementing them cooperatively. It is to be hoped that this will also remain so after the crisis.
Daniel Mahnken is a Senior Corporate Communications Manager at Saloodo!. As a qualified journalist, writing is practically in his blood. After studying sports journalism, he wanted to become Germany’s Next Sports Commentator, but then he discovered logistics and has been stuck with it ever since.