The impact of Covid 19 on Logistics
Logistics firms who have been involved in the movement, storage, the flow of goods. Are directly affected by the Covid-19 pandemic. As an integral part of value chains. Both within and across international borders, logistics firms facilitate trade and commerce and help businesses get their products to customers. Supply chain disruptions to the sector caused by the pandemic could, therefore, impact competitiveness, economic growth, and job creation.
Overview of Logistic Sector
Logistics companies connect firms to markets by providing various services, including multimodal transportation, freight forwarding, warehousing, and inventory management.
This is important for the global transportation of products and goods.
Apple, iPhones for example uses components from more than 200 suppliers in more than 43 countries. And they need a good flow of the transfer of their goods.
These can be achieved by firms outsourcing their logistics functions to third-party logistics services providers. Especially those with integrated, end-to-end solutions capabilities.
The relationship between the logistic sector and higher-income demonstrates the contribution towards productivity and economic development.
Covid 19 Impact on this Sector
Covid 19 Impact was first felt in China, as China’s market is the biggest manufacturing market so the effect was really big.
China also plays a big role in the manufacturing and it has a particularly significant role in global transportation.
200 of Fortune global 500 Firms have a presence in China
Global supply chains were affected by the disruption of manufacturing in China.
Crago was blocked at China’s major container ports, travel restriction led to a shortage of truck drivers to pick up containers.
Ocean Carriers canceled or blanked sailings.
The resulting shortage of components from China impacted manufacturing operations overseas. Major industries around the world, including automotive, electronics, pharmaceuticals, medical equipment, and supplies, as well as consumer goods, were affected.
At the start, when the pandemic was really starting, it affected most of the countries nearby China and Europe but it drastically spread through European major countries and set the alarm to the World in late March and April 2020.
At that time safety measures were introduced by WHO, such as social distancing, wear masks, and gloves.
Impact of Covid 19 on Global transportation segments
Volumes fell by 19 percent in March 2020 due to a sharp reduction in passenger flights (which carry freight as belly cargo). And the drop in manufacturing in China. However, as shippers and governments turn to air cargo for essential goods. Airfreight rates have increased—some carriers are seeing delays with increased congestion at airports. Mid-April saw an increase in capacity, as well as a recovery in volumes transported (although they are still down, year-on-year). The overall reduction in capacity is greater than the net reduction in demand, which supports higher air freight rates.
Total container volumes handled at Chinese ports dropped by 10.1 percent in the first months of 2020. Agility Logistics reports considerable constraints to ocean freight around the world, impacting both key exporters, like Brazil, China, India, and Mexico, as well as importers like the European Union. According to DHL, weak demand will continue to affect routes between Asia and Europe, the United States, and Latin America. Consequently, additional blank sailings are expected in the coming weeks.
Unlike ocean and air transport, land transport has generally remained partially available globally as roads have remained in operation, except in countries under severe lockdowns.
For the food and medical supply chain, most of the land transportation operations were still working in most of the countries. Medical equipment transfer or food transfer to most affected areas within the countries was mostly dealt with by Land transportation.
But Land transportation for other economic perspectives such as manufacturing was generally not working at full capacity.
Demand for rail services has grown because of higher air cargo freight rates, blank sailings, and longer transit time for trucks.
The impact is severe for small players: Small trucking businesses are being severely hit because they tend not to have any backup, recovery plan, or intermittent operation plan. Lack of technology, as well as tools to follow health guidelines (for example, disinfecting deliveries), further complicate their response.
While top players experienced a strong impact on their businesses or projects because of huge restrictions over government policies of traveling and lockdown.
Response to the Crisis
For the most part, governments have responded to the crisis by designating ports, shipping, and trucking services as essential. And thereby exempt from lockdown measures.
Most of the countries closed the land and air transportation for regular use, such as passengers travel. But the land and air transport were open for transport of essentials commodities, supply chains, cargo, etc.
Many airports were closed for travel of passengers but remained open for cargo services.
Governments of different countries are working on policies to make things better for both consumer and seller on a broad level market.
Covid 19 special precautions should be taken under the law and they will be must follow by large companies and firms.
New Safety Measurements
To protect the staff’s health, some companies introduced protocols on social distancing at warehouses. Companies are disinfecting the work areas and providing protective gear while giving staff unlimited unpaid time off. However, these efforts, which come at a higher financial cost, cannot guarantee protection against outbreaks in confined warehouses.
An alternate mode of transport
Many companies are using creative alternatives to their go-to transport modes. Since the reduction of passenger flights has reduced airplane belly cargo capacity. Companies such as DHL have used charter flights to transport shipments to and from China. Airlines are also repurposing passenger aircraft for cargo. Some observers are even forecasting a boom for the China-Europe rail as 60 percent of the air freight capacity between China-Europe has vanished.
Future plans to fight Covid 19
Most logistics firms are looking for air cargo services because many of the burdens from airlines were lifted during covid 19.
The stream in air shipment also shown an increasing dimension. And all the international goods transporting firms. Now looking for a long-term approach to fix these problems in the near time.
Governments have responded to the crisis with temporary trade embargoes. And export restrictions for sensitive cargo (such as medical supplies, pharmaceuticals). In the longer term, logistics costs may increase due to tighter cross-border processes. And controls fueled by concerns regarding the transmission of diseases.
The business on e-commerce is on rising as they have an advantage over primarily business because most of the services work digitally-not physically.
The shift in home-work or remote-work was also trended during covid 19 and most of the e-commerce companies who are selling products online were in favor of online work from home.
As it will decrease a lot of problematic situations caused by covid 19 such as the use of masks, social distancing, lockdowns, and much more.
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