Logistics Solutions for a Post Covid-19 World

In four short months, the COVID-19 pandemic has brought the world’s economy to its knees and changed its course forever. The aviation industry with particular emphasis on cargo has been one of the key industries to suffer and will need to act fast in order to adapt and recover from its losses.

Business owners are having to make some tough choices in order to survive the ‘new normal.’ As we speak, companies are introducing new policies to alleviate the impact on supply chain and to maintain its profitability. If you are a business owner looking to regain your footing in your industry post-COVID, read on for the current methods companies are adopting to survive:

1. Higher Inventories

Due to the global pandemic, many businesses with stretched supply chains and low inventory levels were severely impacted. As a result of this, we will see many companies choosing to maintain higher inventories to mitigate the issues that have arisen. Industries that have specifically benefitted from this include those that are dealing in critical goods such as pharmaceuticals. Although this measure requires a higher amount in capital, it is thought that consumers will favour businesses that show a more resilient and sustainable approach therefore increasing demand and profitability.

2. The End of Single Sourcing

With trade tensions rising between China and the rest of the world, we are now seeing a decrease in single sourcing. Companies are now looking to reduce their dependence on China and are seeking alternative countries for their supplier needs.

Returning to pharmaceuticals, many drugs are manufactured in China and India due to low costs. China alone supplies 80% of the worlds active ingredients contained in antibiotics; however, this is likely to change due to the relaxing of EU patent laws. In the past, this law has provided a 20-year protection on any drug produced there and has encouraged many companies to produce drugs outside of the continent. The new changes potentially make Europe a much more attractive place for pharmaceutical production and we could see a lot more production taking place as a result of this.

There is a possibility that global health insurers may impose quotas, including products and ingredients from specific suppliers, which could also mark the end for single sourcing. Despite this, a large amount of non-generic drugs will continue to be made in China and India due to costings, particularly if the countries have a vast quantity of safe stock and have the capabilities of mass-producing critical medicines.

3. Business Travel Reduction

Key business changes such as remote working and video conferencing, that assisted employees during lockdown, look set to become the norm for previously office-based workers. With this in mind, business travel undoubtedly will experience a steep decline with a knock-on effect to industries such as automobile manufacturing, as less people feel the need to buy a car. This decline will have a considerable impact on global economies with Europe alone, depending on car manufacturers for 10% of their overall revenue. The industry was already suffering with the recent developments in electric car manufacturing which requires fewer parts from a combustion engine, this coupled with the disruption to the supply chain spells bad news and their monopoly in the transport world looks set to end.

On a positive note, e-commerce businesses will emerge from this crisis as the big winners as more consumers realise the benefits of shopping online without having to leave their homes. The increased popularity in online shopping will be welcomed within a suffering air cargo industry which could see a potential return to pre-COVID profitability a lot sooner than expected.

The Importance of Freight Forwarders in the Current Climate

It’s hard to predict what a post-COVID world will look like for the airline industry. With part nationalised airlines receiving government bail outs, business and commercial travel looking set to decrease and a fluctuating oil price, it can start to look like a minefield for all involved. Senior management will need to act fast to implement the appropriate social distancing measures and key strategies to stay afloat; however, all is not lost. If predictions pay off and countries continue to hold higher inventories and near source their products, this could cause inflation and interest rates to rise. If this were to happen, holding expensive goods for a longer time may not be as cost-effective as previously considered, which could see more businesses favouring air freight over the alternative methods.

For business owners that rely on the transportation of goods, now is the time to instruct the services of a reputable freight forwarder, particularly one that keeps themselves abreast of developments and can navigate all these new changes to the industry to ensure the most cost-effective method of sending and receiving vital shipments for your company.

Time to Take Action

Make no mistake, the measures that have been introduced as a result of COVID-19 are here to stay and industries, such as logistics, will work very differently. This is undoubtedly one of the greatest, if not the greatest challenge that the modern world has ever faced. The time to take action is now and those who are willing to adapt will prosper.