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International Forwarding Association Blog » European Logistics » Trends That Will Transform the Logistics Industry in the Post-Covid-19 Era
European logistics industry

Trends That Will Transform the Logistics Industry in the Post-Covid-19 Era

With vaccines receiving regulatory approval for roll out by national authorities, hopes are high that the pandemic is slowly coming to an end. It has been a difficult year, however, with millions of people hard hit by restrictions, lockdowns, and school closures.

Many industries have been affected as well and are still struggling to recover while others shut down. It is safe to say that the European logistics industry has been hit like many others and is continuously adapting to meet safety protocols and current demand.

 

the Logistics Industry in the Post-Covid-19

 

What we are likely to witness is small businesses disappearing, rising prices, and other trends that have already emerged and are here to stay for the foreseeable post-Covid future.

Small Businesses Shutting Down

The global crisis forced many small logistics businesses to shut down, and some went bankrupt. This is good news for large businesses that have greater access to funding to purchase insolvent companies and thus increase their market share and expand operations. Some insolvent companies and distressed businesses offer a good investment opportunity. This may result in a monopoly occurring, with large companies having unfair advantage over competitors.

Future Price Hikes

Businesses with low inventory levels have been seriously affected by the pandemic. This is because companies with quickly declining inventory rely more heavily on suppliers as to maintain their stock. With shipping and delivery services being affected amidst the pandemic, companies with low inventory levels found it difficult to replenish stock and ran short of goods to sell. In a situation where supply is unpredictable, it is always good to keep inventory levels high. One problem here is that companies need higher operating capital to invest in more stock which is what larger businesses can afford. The fact that they invest more means that prices are likely to go up.

Supply Chain

The disruption to supply chains is still a major challenge, especially in economies and regions in lockdown. Rebooting the global economy means ensuring that services and goods are supplied safely, quickly, and efficiently. To prevent supply chain disruption, more and more companies choose to relocate and move their production capabilities closer to home. One option for US companies, for example, would be to relocate their supply chains in China to Mexico.

A recent report released by the Resilience360 and Business Continuity Institute illustrates the importance of diversification. Researchers surveyed 350 retailers and manufacturers around the world to find out if they experienced significant supply disruptions. About 73 percent of businesses admitted to having experienced a major supply-side disruption because of the global pandemic. Close to 1/3 of business owners shared that they would source less from suppliers operating in the Far East. The pandemic made many businesses take a closer look at their inventory levels and sourcing streams to prevent future supply chain disruptions. European manufacturers that are heavily dependent on Asian suppliers for components are a point in question. They experienced major supply-side disruptions, and many plan on performing due diligence to reduce operational risk.