Of course, during the year 2020 there came severe disruption before improvements were brought about. And before the disruption there was nothing to prepare companies to make the immediate and necessary adjustments that covid-19 compelled them to introduce.
Nevertheless, and fortunately, it’s also true to say the laggards were in the minority. Indeed, what has impressed many commentators, and has caused some to write lyrically of the resilience of the global logistics sector, has been the often-imaginative response of businesses in the face of unprecedented challenges to their operations imposed by a deadly virus.
Perhaps what has been most striking about the coronavirus’s appearance on the international stage has been the immediacy of its effect on global supply chains. Never smooth-moving of their own accord, these complex, necessarily diverse networks have always required tweaking to achieve flexibility. Suddenly, however, a viral spanner was thrown in the works, fracturing all current systems put in place to achieve planned and regular freight delivery.
The constraints, lockdowns, closures, prohibitions, and widespread strictures imposed by bewildered governments all contributed to a state of growing arbitrariness. Temporary port closures resulted in en-route consignments being delayed or rerouted from their intended destinations. Passenger flights were cancelled willy-nilly, resulting in severely reduced belly-freight capacity. Customs clearance times lengthened as border-control protocols were more strictly enforced. The imposition of physical distancing, hygiene practices and sanitisation regimes caused initial uncertainty and inconsistency between businesses, and sectors within supply chains.
There was initial confusion amongst road transport hauliers when the Government of Western Australia eventually introduced its ‘Covid Safety Guidelines — Transport, Freight and Logistics’ in August 2020, some 5 months after WHO had declared the coronavirus outbreak a pandemic.
The newly introduced safety rules required freight and logistics workers to attend for covid-19 testing within 48 hours of entering Western Australia, if they had not been tested in the previous 5 days. Thereafter, they should be tested every 7 days. Helpfully, the Guidelines omitted to include the locations of official testing sites, although a contact number was given where further advice could be sought.
Suddenly, logistics businesses had to think even more quickly on their feet. They immediately needed to secure new and diversified supply chain routes, to accommodate expanded demand and changes in end-consumer behavior; they needed to think even more laterally and, at the same time, to keep costs under control.
Is This the Start of a New Beginning?
As I write, there are indicators, both actual and seasonally adjusted, of a November 2020 upswing, year-on-year, in both worldwide air cargo levels (1.6%)1 and the new export orders component of the PMs’ Index (3%)1. Pre-Christmas shopping led to strong sales (up 5% yoy)1, especially online transactions.
These are, of course, to be expected, and include additional retail ‘events’ such as Black Friday (principally in the U.S. but also now amongst European and other western consumers) and Singles’ Day in China. Without doubt, the news is heartening at a time of much uncertainty and insecurity, both economic and political.
Those encouraging figures, together with other supporting data generally, have strengthened the hand of a growing cohort who seek to gainsay the pessimists in the freight forwarding and logistics arena. The doomsday protagonists forecast a major economic decline in the wake of the covid-19 pandemic. They prophesy the end of globalization itself, no less.
In the vanguard of the optimists is Dr. Harry G. Broadman2. In the 30th June 2020 edition of Forbes magazine he states, of globalization’s purported decline, “That is a myth”. He goes on to argue that, on the contrary, covid-19’s origins in China, and that country’s lockdown to prevent further spread of the virus, have acted as a catalyst for innovation.
These events have had the effect, he said of “spurring businesses around the world to further diversify international supply chains, to re-double their efforts to mitigate risks while continuing to exploit opportunities across global markets”.
Broadman sees technological innovation, such as ‘the internet of things’ (IoT) (through which every-day devices communicate with one another) and digitalization, as adding value to existing, traditional logistics firms and as the saviour of the logistics sector.
At the same time, he reminds the reader to appreciate the resilience of established enterprises: he reminds us that while digital logistics technology companies are more light-footed and innovative than their traditional counterparts, the latter are long on industry expertise, are experienced at cultivating and nurturing trust with their customers, and have long-standing partnerships with other actors.
Broadman is not alone, and other ‘cup-half-full’ business strategists see a bright future for the logistics and freight-forwarding sector. A renaissance, even. They argue that control of operating costs is the paramount key to business survival and subsequent success. They see technological improvement as the means to streamline business operations and to keep a lid on costs. They cite vehicle tracking as an example.
A logistics business, whether large or small, with a fleet of haulage trucks can benefit hugely from introducing a system of automated data collection relating to vehicle usage. This would include recording fuel consumption in real-time combined with gps-based vehicle identification and location.
By these two means alone, each vehicle’s delivery itinerary can be planned according to the shortest, least congested and speediest route, thereby saving fuel and vehicle maintenance costs. It would also facilitate additional deliveries, thereby increasing productivity and, again, effectively reducing costs.
The same data can give insights in to driver behaviour and driving style, both of which can have a bearing on fuel consumption. In those circumstances, additional driver training can be given, for the benefit of both the business and the employee/contractor.
In summary, therefore, we see that an unintended (but welcome) consequence of the covid-19 pandemic has been an upsurge in logistical digitalization and technological innovation that together promise a healthy future for the freight forwarding and logistics sector, and for cargo transportation and delivery generally. The extent to which that future is realized will, of course, be the subject of ongoing interest and debate.
1 © International Air Transport Association (IATA), 2019. Air Cargo Market Analysis, November 2020. All Rights Reserved. Available on IATA Economics page.
2 Harry G. Broadman in Forbes magazine, ‘Digitalization Is Upending Global Logistics, Now Augmented by Covid-19’s Social Distancing Imperative’, dated 30/6/2020.
Dr.Broadman is, amongst other things, a global business strategist. He has served as the lead U.S. negotiator for the establishment of the General Agreement on Trade in Services (GATS) (which covers cross-border transactions for all services sectors) as part of the founding of the World Trade Organisation (WTO) in 1995, and earlier when he had the analogous role for the negotiation of the North Atlantic Free Trade Agreement (NAFTA)