The COVID-19 pandemic has had a drastic impact on trucking companies and the logistics industry; an impact that has highlighted the vital importance of transport and freight. The effects are likely to ripple into the future, and they’ll continue to change the daily reality of the industry around the world.
SAP Africa’s logistics industry value advisor, Samantha Naidoo explained to webzine BizCommunity that the logistics sector is the mainstay of global trade, and that it was an essential factor in most, if not all, other sectors. She elaborated that a single disruption in trucking, transport, freight, and logistics can affect other sectors’ performance. Given this, the way that the logistics industry responds to the pandemic makes it one of the most influential factors in the adaptation and survival of other sectors.
Prior To The Pandemic
It would be incorrect to presume that the global supply chain, including trucking companies, rail, and transport by air and sea, was fine and well before the novel coronavirus was identified in the Chinese city of Wuhan. Even though venture capital investments in startup logistics companies grew by 76% compound annual growth rate to more than US$28 billion between 2015 and 2020, the global supply chain faced several significant challenges. Among those factors were sustainability issues, an increase in protectionism, and the possibility that trade wars could be rekindled.
China First To Feel Impact
Unsurprisingly, China was the first country to experience the impact of COVID-19 on trucking companies and logistics. The country, which is known as the world’s factory, was the epicenter of the initial outbreak of the new coronavirus.
According to the International Finance Corporation, the pandemic disrupted the country’s manufacturing industry. This was compounded by travel restrictions that affected trucking companies, the prevention of cargo ships from berthing, loading Chinese-made items, and offloading goods from other countries, and backlogs at China’s ports. The situation had a ripple effect on supply chains around the world, and it resulted in sudden shortages of goods and commodities.
Naidoo explained that China is responsible for approximately 60% of the world’s exports. The result of the shortages meant various sectors received neither the essentials they needed for their work, nor the stock that would have enabled them to better cope with the lockdowns and economic shutdowns in their own countries.
The Impact In The U.S.
When the United States eventually went into lockdown, transportation was one service deemed essential. This allowed trucking and logistics companies to operate, even if it wasn’t quite business as usual.
Although activity in areas such as live entertainment and the restaurant came to a standstill, many drivers, fleet managers, and dispatchers were forced to work overtime. This resulted from logistics and trucking companies trying to balance emergency deliveries with disruptions to the supply chain.
Speaking to Verizon Connection, Beck Trucking owner Nick Beck said his company had tried to help where possible. He told the publication that his company assisted several customers to supply grocery chains by pulling resources from the company’s usual operations.
While Beck’s customers turned to his trucking company, others have turned to more than trucking. Many adopted an intermodal approach, making use of transport by air and sea too.
According to Statista’s report on the Impact of Coronavirus On Year-On-Year Intermodal Freight Volume In U.S. 2020, intermodal freight volume declined because of the pandemic. However, in October, intermodal freight was up by 10% compared to the same month in 2019.
Despite the increase in intermodal freight, truck freight slowed down. One reason for this was that the federal and state governments reduced truckload capacity. Even so, those governments insist the supply chain be kept in motion.
COVID-19 affected not only the trucking industry in terms of supply chain disruptions and emergency deliveries. According to Cushman & Wakefield, the pandemic also impacted truck drivers in various ways.
Long waiting times when collecting or delivering stock affected drivers, due to busy receiving schedules at a time when on-site personnel numbers had been decreased.
The firm also reported that some drivers struggled to find food and restroom stops on various routes, and that drivers were reluctant to transport loads to COVID-19 hotspots. The latter resulted in increased ad hoc and spot market rates. Among the other effects were extra fees due to limited space preventing less-than-truckload freight from being stored in destination terminals.
Freight forwarding companies in the U.S. have also been impacted. One effect of the pandemic has been higher storage costs has affected their ability to collect and send goods around the country in their usual time frames.
The Impact In Europe
COVID-19 similarly impacted Europe’s trucking companies and logistics industry. Even though the road freight market has played an important role in transporting medical equipment and medicines during the pandemic, the market shrunk this year.
In June, Statista predicted that the road freight market in Europe would decrease by as much as 17% in 2020, compared to 2019’s figures. In September, the research platform reported that trucks in Europe drove 8% less between June 8 and 14 than they did prior to the pandemic.
Changes Must Be Made
The severe impact of COVID-19 on trucking companies, logistics, and other sectors highlight the fact that changes must be made to manufacturing, transport, and other areas. According to the World Economic Forum, some businesses may need to digitize their services to ensure they become truly sustainable. Other businesses may need to relocate their supply chains, either to a country other than China, or to the country, state, or province where they’re based.
According to Naidoo, digitizing the customer experience is one of the essential changes that should be made. She explained that doing so would provide freight and trucking companies with new methods of customer engagement, and help them compete effectively with new entrants.
In Naidoo’s view, a greater embracing of technology can help trucking and transport companies build the resilience they need to survive the pandemic. They’ll also be able to successfully navigate a future likely to be very different to life before the first cases of the virus were reported in December 2019.
