What has been the impact of COVID-19 on logistics?

More than a year later since the first lockdowns went into effect in Europe to mitigate the spread of COVID-19, the effect of the pandemic on the logistics industry is perhaps still too early to grasp. What has been visible was the fact that some manufacturing industries struggled, while others thrived. However, shipping goods was difficult, especially as travel rules changed what seemed like on a daily basis.

Perhaps the best example of that could be Girteka Logistics‘ efforts to make sure that goods reached Italy during the initial shock in March 2020, when other companies were hesitant to go into the country, as there was a risk that one‘s trucks would be stuck at the border. Adhering to all safety and travel-related recommendations across the European Union (EU) and most importantly, World Health Organization (WHO)‘s recommendations to keep our drivers safe and as far away from any health risks as it was possible to do so.

Another prime example of change was the way the sector had to adapt its communication, as not only the employees of logistics providers moved to remote work, but clients did so as well.

It was a challenge. From our point of view, we embraced the challenge and we feel like we only got closer with our clients, as we realized that information and data are more important than ever. At the same time, it was only one side of the equation. The other was making sure that we can communicate that information to our clients and do so efficiently.

Responding to the “new normal” was one, the real challenge was thriving in these circumstances. It took some time to adjust, yet at the same time, being proactive can be a game-changer and allow one to stay ahead of the competition.

Especially in regards to your ability to carry over information, as transit rules were changing on what seemed like a daily basis. More than ever, the reliability of your road transport services was important – while it always has been the number one factor – it now overshadowed other things as logistics was sucked into a whirlwind of changes.

With the pandemic-related restrictions in place, some industries struggled or foresaw less demand from consumers for their products. As a result, manufacturing volumes were reduced, and as a by-product, the company required less truck capacity to ship its products to their end-users.

A fair share of industries struggled, whether it would be tourism and hospitality, clothing manufacturers, or, in a situation that has completely flipped the script since, furniture manufacturers. At the same time, others thrived – retail shopping centers, in particular, grocery stores, electronics manufacturers, excise goods manufacturers, etc. As a result, having a diverse portfolio of clientele and not putting all of your eggs in one basket could mean that despite an economic downturn in some areas, you are well protected with the ability to divert capacity elsewhere and make sure your assets continue to generate revenue.

Another important factor was the well-established relationships between a provider and a customer. Once again, reliability was the name of the game, as the situation continued to be unstable – meaning that if you have a strong historical relationship with a customer, chances are that the relationship continued throughout the pandemic. Taking a risk and trying to establish a new business agreement during such times of uncertainty was not something desirable amongst those who were looking to carry their goods across Europe.

The cherry on top was the fact that consumer spending, at least on smaller household items on e-commerce sites, like Amazon, has not stopped. In fact, as Eurostat data points out, the percentage of people who bought goods or services online in the European Union (EU) in 2020 grew by 4% compared to a year prior, and 10% compared to 2015. Eurostat also expects e-commerce to grow further, which is another opportunity for logistics companies to expand into. While some of these opportunities are related to the last-mile deliveries to the customer, there is plenty of space to grow to carry goods between distribution centers, warehouses and points of arrival onto the continent, like seaports or airports.

The crucial aspect behind recovery is that people are able and willing to move across borders. At the same time, the ability to go to a bar or other festivities will be important as well.

Simply put, with people being able to move around and visit various entertainment venues, whether it would be cinemas, restaurants, or art galleries, consumption of various items will increase. For example, the demand for clothing would grow, as one would wear out their clothes much sooner and there once again would be a desire to look sharper in an event. As trivial as it sounds, it all does resonate across the supply chain and a shift in consumer behavior will lead to increased production levels – production that will have to be carried on trucks across Europe to reach end-users.

Still, while the rates for road freight have grown in Q1 2021 and year-on-year, according to Transport Intelligence, there is room to grow prior to the prices reaching pre-crisis levels. That is not to end on a negative note, as with the vaccination effort underway and pent-up demand not only to travel but to go about and have fun will only lead to increased road transport prices, as demand for more goods to reach end-consumers will grow. Nevertheless, the pandemic will leave a long-lasting impact on the logistics sector, as the priorities of customers to have a reliable and communicative partner will only intensify going forward.