The Logistics Sector Faces Twin Threats of Trade Conflict and Covid−19

Shipping and logistics are critical to the global economy and over the last 20 years Asia has emerged as a leading in the industry. But right now the logistics sector faces the twin threats of a trade conflict and Covid-19. Here’s how they’re hanging these challenging times.

Exporting is the oil that keeps the global economy running smoothly. Any disruption to supply chains can have a direct impact on the world’s economic growth. Even before the Covid-19 pandemic, experts were predicting a slowdown in global trade due to the rise of protectionism and trade tensions between the U.S. and China – so-called ‘slobalisation’. Throw in the risks of a hard Brexit and it seems the logistic sector is facing a perfect storm in 2020 and beyond. 

The UK’s One World Express is a logistics firm that provides cross-border trade tariffs and global shipping solutions for a wide variety of businesses around the world. Its CEO, Atul Bhakta, says: “The continued ‘trade war’ being waged between the US and China has inevitably affected the level of goods transported across the pacific between the two nations. 

“Additionally, it has forced companies in both states to seek new partnering opportunities elsewhere in the world, facilitating a shift away from more established logistics routes and towards a more globally interconnected international logistics network.” 

When the pandemic struck, companies like One World Express were forced to respond quickly and efficiently to ensure clients could still get goods from A to B. “Numerous measures have had to be implemented to minimise the risk of Covid-19 contagion. These included re-arranging driver shifts to prevent overlap and reducing the number of people working in our workhouse facilities. Further health and safety measures – such as deep cleaning and hand sanitising – have had to be implemented at logistics hubs, processing centres and warehouses,” says Bhakta. 

“In many instances, the reduction of the number of people able to work in warehouses, combined with the increased demand for home deliveries during global lockdowns, has put the logistics sector under great pressure,” he adds. 

But it’s not all doom and gloom. ECommerce has boomed during lockdown.  For example, Nike has seen digital sales rocket over the summer. Nike CEO John Donahoe said the shift to online sales is permanent. “We know that digital is the new normal. The consumer today is digitally grounded and simply will not revert back.” 

Logistics firms have had to utilise innovative thinking in order to keep up with the eCommerce boom while implementing social distancing measures. Bhakta comments: “The increased demand brought about by Covid-19 underlines the importance of tech within the logistics sector. It has never been more important to have real-time insights into how goods are moving, where they are in the world, and what actions need to be taken to ensure everything runs smoothly. Only by relying on software and data analytics can logistics companies (and their customers) achieve these things.” 

As ever in business, major challenges can be commercial opportunities. A recent survey of over 500 UK companies, commissioned by One World Express, discovered many of them have needed to source new suppliers or vendors after the pandemic cut them adrift from their usual logistics partners. 41% said that this process had actually led them to use superior alternatives to those they had previously worked with. Similarly, 35% said they have made cost savings by sourcing cheaper suppliers to those that they had relied on before the lockdown period.

Bhakta notes: “57% of UK businesses believe the pandemic has provided the incentive they needed to make positive changes to their business model. What’s more, a slim majority (52%) are confident that they will see positive growth in their turnover in the second half of 2020.” 

Looking into the future, Bhakta believes that new technology will completely shake-up the logistics industry by the end of the decade.  “We’ve already seen how robotic automation has transformed warehouses, especially through Amazon’s ‘Drive’ bots, and this trend will likely continue throughout the decade. Additionally, more advanced AI will be able to identify any inefficiencies present in supply chains or transportation networks, allowing for further streamlining across the logistics industry in order to provide greater returns for customers and clients alike.” 

“More generally, delivery times are coming down rapidly. Next-day delivery is now widely expected by businesses and consumers when shopping for goods – same-day delivery will likely become the norm over the coming years. By 2030, vendors and logistics firms that cannot facilitate same-day deliveries will lag behind competitors,” concludes Bhakta.