The Impact Of COVID-19 On Logistics Business

The Impact Of COVID-19 On Logistics Business

COVID-19 surely paused the world for a second and the whole nation suffered to steady up the economy. In that way, Logistics business was also one of the biggest domains that got affected. Here’s a small study on how the Logistics business was affected and how they rose back with all safety measures.

We all know that Logistics businesses are involved in the movement and storage of goods. Due to national level lockdowns, an integral part of supply chains, both within and across international borders were widely affected.

The main goal of any logistics firm is to facilitate trade/commerce and help businesses get their products reach their customers hassle-free. During COVID Lockdown, technology happened to be a big saviour. In these testing times, the top priority of people in every country was to stay home and stay safe due to which people started purchasing necessary things from ecommerce platforms. Online marketing and ecommerce platforms benefited out of this with doubled up sales. Hence major commercial businesses from large to small scale industries in turn depended on logistics to meet the demands of the customer.

Based on the reports from IBM’s U.S. Retail Index, many physical stores were affected at the same time there’s also a steady growth in digital shopping in the last five years. In the first quarter of 2020, department store sales and those of “non-essential” retailers declined by 25% which then further declined to 75% in the second quarter.

Apart from this, TechCrunch mentions department stores are expected to decline by over 60% for the full year. Meanwhile, e-commerce is projected to grow by nearly 20% in 2020.

The reports also highlighted what type of products were felt necessary to people. For example, people used online shopping majorly for dress, accessories, gadgets, etc. But during this pandemic season, E-commerce platforms saw a major decline in all the above mentioned categories. Whereas, other categories such as groceries, home appliances, sanitation products, office supplies, masks and other safety accessories were accelerated by 12% to 14% respectively.

One of the leading E-commerce platforms Amazon was also benefited during this period and sales profit surged to a stagering 40% growth. And based on the reports from Time, during the pandemic Amazon informed their sellers that they would only accept the high-demand products which serve basic household needs, medical supplies etc. This left other different category sellers in pain and in-turn their products were showcased as if they were not serviceable in your area or no stock.

And other famous retailers like Walmart and Target were able to survive by using OmniChannels to fulfill customer needs and surprisingly it panned out well for them. In Walmart’s case, the pandemic helped drive e-commerce sales up by 97% in its last quarter. Target set a sales record as its same-day fulfillment services grew 273% in the quarter. Both retailers have also invested in online grocery, with Walmart today offering grocery pickup and delivery services, the latter through partners. Target has also just now rolled out grocery pickup and runs delivery.

When there’s a growth in digital shopping, there’s also a growth in Logistics which takes care of shipping the products to its customers.

That being said, some of the big industries such as medical equipment, automotive, electronics, pharmaceuticals and consumer goods got affected. Although manufacturing picked back up by end-February, about 70 percent of large industry had restarted operations—a return to full production capacity is unlikely in the upcoming months as the pandemic has spread to China’s trading partners.

Based on the news from ifc.org, the impact of COVID-19 was first felt in China due to the role it plays in global manufacturing (with Wuhan, the epicenter of the pandemic, playing a particularly significant role—more than 200 of Fortune Global 500 Firms have a presence there). China – the world’s largest outsourcing hub, got locked down, crippling the majority of industries that relied on China’s cheap workforce to produce goods.

They also stated, Cargo was backlogged at China’s major container ports, travel restrictions led to a shortage of truck drivers to pick up containers, and ocean carriers canceled (or blanked) sailings. The resulting shortage of components from China impacted manufacturing operations overseas.

To stop the spread, Indian Government and other country governments limited the travel options and even in some cases they stopped air and sea travel to avoid carriers of the disease entering and spreading further infections in their countries.

Also, global trade mag told, Further, packages from China were suspected to carry the virus so sea freight was strictly halted. This led to air cargo taking on the mantle of transporting goods all over the world. Airports are now using this channel to recuperate profits lost during the Covid-19 onslaught. However, even as air freight becomes popular, the demand is too high and airplanes are having trouble fulfilling demand.

But how did all these logistics businesses survive is a whole different story and we will be covering this on our next blog.