How the Logistics & Transportation Industry Has Been Affected by COVID-19

COVID-19 is still raging across the globe, and even if things are calming down in some countries, others are peaking at the moment. We’re still a long way from going back to normal, and it seems that the normal that we end up going back to might be quite different than the one we started from.

It would be redundant to say that industries across all levels suffered a blow from the pandemic. Shops have closed down; factories have turned off their assembly lines, concerts and festivals were canceled – the losses keep piling up.

The logistics and transportation industry has a significant role to play during the pandemic. Still, like any other industry, it has been somewhat morphed by the situation. Let’s see what these changes encompass.

The Impact On The Logistics Workforce

The capabilities of all logistics companies have been put to the test during the pandemic. Due to the large scale panic, parts of the population felt that they needed to stock up on essential household products – most prominently toilet paper and cleaning products.

That has led to widespread shortages of essential household items and the logistics infrastructure ground under the pressure of very high demand. It will most definitely light up some red lights for managers to ensure improved workforce management in times of high demand.

Smaller Companies Under Threat

We’ve already seen a lot of smaller and medium-sized logistics companies proclaim bankruptcy due to the pandemic. Depending on how long this situation persists, we might see an even greater number of companies shut down.

The reason for this is that they have significantly smaller inventories than larger players on the market, which leads to the small players losing their competitiveness. As more small companies close down, the bigger companies with larger budgets may expand at their expense.

Inventory & Supply Chains

As one of the biggest problems for the logistics companies, the issue of small inventories stands at the center of the woes they face. Companies with small inventories that have decided to keep their stock low are unable to restock, as border closures and enforced isolation have limited the transport of goods.

One of the contingency plans for similar situations in the future might lead companies to focus on expanding their inventory to mitigate the risk of suffering bigger losses.

Similarly, larger supply chains suffered more significant losses due to the pandemic. With more links within the supply chain, there is a bigger chance that one or more of them breaks, promptly paralyzing the entire transportation supply chain.

These issues will lead companies to expend resources to shorten the supply chain making it less likely to be compromised. Furthermore, breaks in smaller supply chains take less time to “heal” and, therefore, do less damage to the bottom line on the receiving end of the chain.

A Chance For A Monopoly Forming

Many of the larger companies will have an opportunity to take over markets that were until now served by small logistics and transportation businesses. Because of this, a certain number of markets will be monopolized by more significant players.

The acquisition expenditure and the inventory policy and workforce management changes larger companies need to go through will cut into their available budgets pretty hard.

Due to these expenses and the fact that they have less competition on the market, the prices of the services they provide will inevitably go up. By how much? It is hard to say, but the rise in costs usually results in an increase in service fees on the customers’ end.

Despite all this, the logistics and transport industry is expected to grow in the post-COVID-19 era. A lot of work needs to be done to stabilize the markets and supply chains after the crisis subsides. Furthermore, as we adapt to the new situation, there is tremendous demand for the distribution of medical equipment related to protection from the disease.

We’ll see how the situation develops as one of the biggest markets, the US, stabilizes. For more information on how a leading Chicagoland logistics provider is modifying its processes in this pandemic era, reach out to JRC Dedicated Services today!

Comments are closed.