Covid-19 has disrupted the global economy overnight, and the worldwide supply chain is not an exemption. The imposition of widespread lockdowns has slowed down and even halted the operations of manufacturers, suppliers, and forwarders.
Here are some of the major obstacles being faced by the logistics industry today and the ways to successfully navigate them.
Restrictions on air and sea freight
The lockdowns took a toll on the freight industry. Passenger flights make up almost 75 per cent of flights; thus, they also carry a significant amount of commercial cargo. Yet, with most flights cancelled and aircraft grounded, supply shortages have become a prevalent scenario. Stringent health inspections have also resulted in more delays.
Likewise, Covid-19 has negatively impacted sea freight. The first quarter of 2020 has seen tight restrictions, preventing crew members from being changed so easily. There was also a severe disruption in maritime services, causing port delays as well as reduction in shipping demand, traffic, and turnover. To make matters worse, there has been a shortage in containers and they were not received back in ports, leading to a rise in container cost.
Road freight bears the brunt of the virus
Since the onset of the pandemic, there has been a soaring demand for medical supplies and groceries that need transport. Aiming to meet this demand, several logistics businesses have resorted to overworking their drivers. Consumers are also facing delivery delays due to the heightened health checkups caused by social distancing and quarantine regulations set by local governments.
Shortage of workforce and labour
In efforts to meet operational costs, most companies today are laying off their employees due to a limited supply and demand. However, the staff lucky enough to keep their jobs end up working overtime to meet the company’s needs and standards. Most factory and social workers have also been exposed to the virus, prompting them to be quarantined. This has caused a labour shortage in manufacturing and supply; thus, putting a strain both on logistics and goods delivery.
Manufacturers shipping raw materials from countries categorised as hot zones of the coronavirus have had to shut down their operations, especially in China. This prompted countries to close off their borders for trading.
Lack of contingency plans and resilience tactics
As soon as the first cases of the coronavirus were reported in mainland China, several countries had plenty of time to prepare and devise a contingency plan to prevent it from spreading. However, social distancing and quarantine rules can only do so much. More than 50 per cent of the companies in the logistics sector have been battered by blackouts in the supply chain with their partners. The outcome has been catastrophic to both the economy and consumers.
How to navigate the logistics challenges brought by Covid-19
The pandemic is upon us, and there is no easy way out. However, it’s crucial to come up with and deploy effective strategies to overcome it. Below are just some of them.
• A joint effort by suppliers – Due to the shortage of suppliers, the few ones remaining have tied up to share some costs. For instance, most manufacturers have consented to share the cost of storage on containers during shipments. This collaborative effort is enabling them to stay afloat in the market even with low volumes of goods to work with.
• Airlines are converting passenger planes into cargo planes – Today, most airlines are redesigning their passenger planes into cargo planes. This strategic move seeks to keep their profits high while still providing employment to some of their workers. Likewise, freight operators and cargo planes are now launching special services tailored to small and medium freight forwarders.
• Implementation of emergency and mitigation strategies – The restrictions in goods distribution have prompted companies to embrace “what if” strategies. It entails dual-sourcing of local production, raw materials, and even in-house strategies.
• Adopting technology – Most companies are now embracing robotic systems, IoT warehousing facilities, and AI-powered technology platforms to manage customers and prevent the spread of the virus.
In a nutshell
Resiliency is innate in the nature and spirit of humanity. The impact of Covid-19 on logistics in Dubai and worldwide is just another stepping stone that will push the boundaries of the industry. However, it takes flexibility and the right contingency planning to ensure a successful outcome. With that in mind, Total Freight International provides you with a host of tailored solutions. We make this possible by partnering with our global freight agent network and technology driver solutions.
Get in touch with our experts today, and find out how we can work together to solve your distinct challenges during these trying times!