A Broken Supply Chain
The supply chain was broken due to the pandemic, with borders shutting down and limited transportation took over. COVID-19 created limitations in the industry that significantly impacted freight, especially with the start of 2020. The economic impact of 2020 on the logistics industry affected international trade, transportation, economic growth, and even job creation. With meta-uncertainty on the horizon, further analysis of the consequences of 2020 on the logistics industry has arisen. Therefore, firms in the logistics industry require 3PL services providers or freight management software to maintain logistic performance.
Future of Logistics: The Economic Impact of 2020
A deadly outbreak of an infectious virus is the last thing anyone in the world would ever want to hear, regardless of what industry they belong to. The virus is responsible for numerous deaths all around the globe. It was also responsible for the commercial deaths of businesses, brands, and startups. Lockdowns and social distancing took over, and the whole world had to pause for a bit just to take things in. A year later, we still don’t actually know how to fight this virus. We have learned to adapt, but the 2020 economic impact stayed.
The 2020 Economic Impact of COVID
Of the most prominent 2020, the economic impact of COVID on the global logistics industry is the direct effect of the logistics industry’s gross value by 6.1%. China got the first hit of the economic impact of COVID through its role in global manufacturing – especially with Wuhan being the epicenter of the pandemic. China is the largest global consumer of commodities, agricultural products, and world trade. So, the economic impact of COVID on the logistics industry began with the halt of China’s business with the rest of the world. There were backlogs, travel restrictions, and the cancelation of carriers. As the pandemic rapidly spread to the rest of the world, more lockdowns and border closures were in order. This greatly restricted and limited the movement and transportation of cargo across the globe.
The Aftermath
Also, different protocols were implemented to reduce the spread of the virus. Of course, we all know how the year went, but it was a hard hit for the logistics industry. A 37-mile long traffic jam formed at the European border after Poland closed its border with Germany to prevent the spread of COVID. There was a shortage of carriers and truck drivers because of the severity of the disease.
The direct economic impact of 2020 is evident in terms of the recession of the logistic industry. But, the full effect of COVID is not yet known – especially with the start of vaccination. The IMF predicted a 3% reduction of the global economy in 2020, with an expected recession to come – a recession that could potentially hit logistics companies and the industry as a whole. A lot of the most significant companies in the logistics industry had to declare Force Majeure due to COVID – which is a clause that makes contracts void in the cases of unexpected circumstances or ‘Acts of God.’
Life Goes On! Living with the Economic Impact
The logistics industry is a strong one for sure, and thus, responding to the crises is critical. Some countries created designated ports for different freight processes that don’t abide by lockdown measures. Due to the need for transport of medical supplies, most airports opened up for air freight and transport of cargo. Safety protocols for staff and companies in the logistics industry work to reduce the economic impact of 2020 and the virus’s spread. Docks and freight forwarders implemented inspections and cross border control to reduce COVID spread and maintain the industry’s integrity.
Freight Solution Software
The use of freight solution software with cloud-based integration like Logisoft also helped the industry survive and thrive. These software go above and beyond the limitations that come with COVID. They allow the logistics industry companies to find a way to communicate with carriers, book and track their shipping and handling costs from a distance. You can reduce inefficient data processing, improve communication, and decrease costs through cost-effective logistics management plans. Freight management software helps you reduce inventory loss through inventory tracking and minimize warehouse storage costs through automated processes. The rise of technology and the logistics industry’s development created firm and stable digital capabilities to provide cargo traceability and real-time visibility. Therefore, we can now do business online with cloud-computing and automation. This makes the industry more durable to withstand the economic impact of any circumstance in the coming future.
A hit to the logistics industry is a hit to the total communication around the world. Therefore, we should have stable foundations for our industry to withstand whatever hit it takes.