From First Mile To Last Mile: How Logistics Changed Over The Last Year!

How Covid-19 Affected Global Supply Chains

Following the outbreak in Wuhan, China, many countries began expressing concern over Covid-19. Shortly after, nearly all major countries had found cases of Covid-19 within their borders, deeming it too late to prevent an outbreak. This meant that governments were left to do damage control. And to curb outbreaks within a country, each government began introducing strict guidelines for businesses and public gatherings. 

One of the most affected sectors was the logistics sector, which had to deal with problems such as a lack of human labor thanks to lockdowns, and delays caused by adherence to social distancing policies which hindered efficiency. 

The shutdown of international borders in many parts of the world was another factor that played a major role in the formation of bottlenecks within road-based freight shipping. Because of this, the trucking sector suffered on multiple ends. Aside from the bottlenecks, increased testing and isolation meant that truckers returning to their countries were forced to go into isolation for 14 days following their return from a delivery which meant that many shipping companies became short on truck drivers, which compounded the already present shortage of truckers in various countries. 

Covid-19 Induced Recession Causes Demand Shock

Due to the pandemic and decreased economic activity on such a global scale, almost every continent began suffering adverse economic conditions such as a drop in employment, heightened inflation rates, and many other factors which resulted in a slow forming global recession whose effects we are still experiencing today. Many experts speculate that the future holds a dark outlook for global economic activity, which could mean that the supply chain industry will suffer yet another loss thanks to rapid decreases in product demand worldwide. 

However, this recession isn’t affecting all industries in the same way. While industries like automobiles, consumer goods, travel and many others have faced decreased demand due to lockdown restrictions at every level. Logistics has been booming in the E-commerce industry. Online shopping and food delivery have experienced exponential growth, with a majority of workforce adapting to the Work-From-Home (WFH) model. Essentially, all goods related to enhancing customer experience within the home have been in higher demand than the last 5 years combined. 

How the Supply Chain Industry Adapted to Covid-19

Under government guidelines, many logistics and warehousing companies implemented Standard Operating Procedures that prioritized the health and safety of workers over efficient supply chain operations. 

These guidelines or SOPs were mainly focused on two prongs. The first was social distancing both indoors and outdoors to prevent human-to-human transmission. While the second prong was an attack against residual particles left behind by humans, accomplished by regularly disinfecting touchpoints that were frequented by workers. 

The result of these SOPs was that valuable time was rightfully spent ensuring protection against the virus rather than maximizing output. However, the logistics industry is resilient. As can be seen, by the many innovations they integrated within record times to ensure that their operations remained at maximum output, which could be the only factor that allowed the industry to return to 92% of pre-pandemic levels within as little as one year. 

The Innovations That Followed Covid-19

Due to Covid-19, many shortfalls became exposed after the implementation of lockdowns around the world. International supply chains began to crumble due to a lack of short-route delivery methods. And to address this problem, many innovative companies began experimenting with drone delivery, which is currently active in first-world countries on a small scale.

Another innovation to combat a lack of transport personnel was to use available space within passenger flights to facilitate the movement of important cargo such as medical supplies. Another alternative method that companies have adapted to help them transport goods during the pandemic is the use of railway transport systems. Railways have been experiencing higher demand around the world thanks to their ability to carry extremely high quantities of load compared to trucks and flights. 

But within the Logistics industry, there have been many adaptations that focus on improving efficiency while ensuring that precautions are taken against infection. The first form of innovation that is being implemented on a massive scale is digitalization. It is being used to improve freight tracking and inventory forecasting to prevent delays and shortages. 

Another rather noticeable step taken by giants in the industry is known as near shoring. Near shoring is the practice of moving vital components of the supply chain closer to the home country of the company, thus minimizing the potential distance that a good needs to travel. Especially for regions like Europe, which has been dependent on China for its raw materials, near shoring provides the chance to lessen dependency on external supply chains. 

Outlook For The Future

Many experts speculate that the logistics industry will be undergoing changes that could both benefit and harm the efficiency of logistics worldwide. Implementation of technological innovations like IoT, warehouse automation, data analytics, and robotics could be one of the driving factors that decide how well the industry does in the future.

But while internal efficiency is being improved, factors such as tightened border restrictions because of the pandemic will make it harder to keep financial costs down. Another result may be the prevalence of bottlenecks at border checkpoints thanks to social distancing protocols. 

Another speculation is that the simplification of supply chains will be brought about by measures such as near shoring, which will result in shorter supply routes leading to shortened times for the “supplier-to-consumer” delivery process. In conclusion, efficiency and ease of access will be improved for supply chains. But it may also be subject to changes in practices brought about by new waves of Covid-19.