As cases of COVID-19 around the world continue to rise, both national and international authorities have taken preventive measures such as lockdown of cities and restriction of movement to limit the spread of the virus. This has placed an unprecedented strain on the logistics industry.
In fact, the global supply and chain have almost experienced a standstill as air travel endures restricted or stopped international flights. The shipping sector has also been hit, with vessels stuck at ports and under quarantine. This ultimately slows down logistics processes, causing expensive delays of goods in demand.
Fortunately, despite these widespread impacts, most logistics companies are doing their best to keep operations running as smoothly as possible. Read on to learn more about the effects of COVID-19 on the logistics industry and how businesses can respond to the pandemic.
What COVID-19 Means for the Logistics Industry
1. Increase in Air Freight Costs
Many logistics companies had heavily relied on air cargo transport for shipment of products across international borders. However, this type of courier service has become restricted because many countries imposed travel bans on flights to prevent the spread of the virus.
As such, shipping costs have surged exponentially with airplanes parked and passenger aircraft used as cargo-only. This discouraged non-essential businesses from choosing air freight as their priority mode of shipment. However, for companies carrying medical supplies, they cannot afford to use slower, cheaper modes of transport. They have no choice but to use air cargo to deliver essential products swiftly.
2. Disruption in Sea Freight
While demand for air freight continues to drop, ocean carriers are experiencing a surge. In fact, LCL sea freight is on the rise due to relatively low, stable costs and more modest inventories.
However, the COVID-19 pandemic has also greatly impacted maritime shipment. For one, many factories were shut down which means fewer goods are ready for shipment. Roadblocks due to lockdown also made it challenging to transport products from factories to ports. This leads to unforeseen disruption and delays of shipment, which can cost businesses money.
3. Dependency on Land Freight
Chaos in both air and sea freight is only a fraction of the logistics challenges faced by businesses during the COVID-19 pandemic. After all, shipments carried by ocean carriers and airlines must still be transported to their destinations once they land.
As a result, most companies started to rely on trucking services to move medical supplies and other essential products to the market. However, a supply/demand imbalance is arising for logistics companies as freight coming into the impact areas is far greater than the freight leaving those areas.
4. Introduction of Digital Operations
Prior to the COVID-19 pandemic, many logistics businesses regarded digital tools (shipment location tracking and software enabling e-signatures) as unnecessary due to the expenses.
Nowadays, though, several companies are now considering the introduction of digital operations as it can help supply chain management in many ways. More and more people are taking a renewed interest in these advanced technologies to guide them during future crises.
4 Ways Logistics Companies Can Cope with COVID-19
Developing a methodical supply chain response is one of the best strategies to respond to the coronavirus pandemic. It can still prove to be difficult, considering the scale and rate of the spread of the virus. With that said, companies should follow a number of steps to ensure customer satisfaction and preparedness for future incidents.
1. Assess Your Supply Chain Design
Many logistics companies have followed a one-size-fits-all-philosophy, assuming that raw materials are always readily available for production and sourcing. However, the coronavirus pandemic has shown otherwise.
As such, organizations should evaluate their current supply chain. Assess if production and distribution capacity is enough. If not, you can diversify production facilities and consider dual sourcing. Most supply chain managers actually recognize the risk of single sourcing but still choose it to keep costs low. And while dual sourcing is relatively expensive, you’ll benefit from extra capacity which is extremely crucial in pandemics. You are also more than capable to support different regions and have faster lead times.
2. Implement a Crisis Management Plan
You probably already have a risk management plan but decided to place it at the bottom of the priority scale. This is a costly mistake. Make sure you proactively manage possible vulnerabilities to your business at every stage. You can do this by assessing your inventory as often as possible. You should also be able to forecast the supply and demand of goods in advance with the help of monitoring strategies.
By applying risk management principles in advance, you’ll be more than ready to face future crises.
3. Keep Open Communication
During this COVID-19 pandemic, it’s more important than ever to keep constant communication with everyone in the supply chain.
You should introduce proper systems such as inventory management and sales order management to achieve visibility across your business. This helps you identify the weakest link in your supply chain which gives suppliers enough time to react to any problems that may arise in the logistics process.
4. Place Importance on Your Employees and Customers
Lastly, you should implement a people-first strategy in your logistics business. Always remember that your employees and customers are the most affected in this pandemic.
As such, you should prioritize their health and safety. If possible, allow employees to work remotely and implement a clear communications plan within the organization. Doing so can help a long way in keeping employees well-informed while ensuring business operations are running as smoothly as possible.
You should also properly manage customer support. During these difficult times, customers are more likely to have several questions and issues. Keep phone (or email) lines open and respectfully respond to their queries. They’ll surely appreciate the warm service and remember your company.
The COVID-19 pandemic has badly impacted the logistics industry from increased shipping costs to imbalanced supply and demand. However, there are some business practices you can establish to properly cope with this crisis.
ALSO READ: The Importance of Cargo Insurance for Global Freight Forwarding
Need help in managing your shipments during this pandemic? Worklink Services Inc., one of the most reliable courier companies in the Philippines, is more than willing to assist you. Having been established in 1999, we have lent our expertise in logistics management solutions to various domestic industries. Contact us today to learn more!
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