’Resilience’ has been the catchword for the past couple of years. We have been talking about resilient immune systems, resilient healthcare systems, resilient social and economic systems. But one other need for resilience has emerged in the supply chain industry. The supply chain industry faced numerous shocks as the COVID-19 pandemic surged across borders and continents. Sea, air, rail, and road freight were each detrimentally affected in the past couple of years.
In this article, we chart the significant causes of concerns that emerged during the pandemic year and have created deep wounds within the industry. However, the resilience of the supply chain industry remains in their ability to conjure solutions at every step of the way. The article also addresses these various solutions and the changing face of global logistics.
Closures, Congestion and Containers
When the virus left the thresholds of Wuhan, the immediate reaction of the government, corporates, and social enterprises were to shut down operations. Understandably, a complete shutdown of ports and terminals was not deemed possible, but there was reduced activity whenever a port or a terminal reported a case. In April 2020, many European ports were working at reduced capacities, and as commercial outlets shut down, cargo began piling at ports and terminals. As recently as the last two months, Port of Shanghai and Ningbo shut down sectors as coronavirus was reported in the docks.
Even the slightest disruption can send the functioning of these large ports into disarray, causing set back to global supply chain movements. This struggle has caused a domino effect through the industry, resulting in rising container prices and the inability to find enough equipment to move the cargo. The question on everyone’s mind was ‘Where are the containers?’. Apart from the pandemic related imbalance, other larger forces also contributed, as the hard-hit carriers began allowing costs to escalate to astronomical heights! The casualties? The small and medium-sized freight forwarders and the eventual consumers.
But no matter the challenges, this resilient industry found alternatives. Early in the pandemic, when the shipping industry was hit, rail freight emerged as the obvious alternative to the pricey air freight and the excruciatingly slow sea freight. All welcomed the sudden boom in the rail freight industry. However, reports from this year suggest that rail freight is facing the same issues as other industries when it comes to rates and congestion. Rail freight over the New Silk Road was hit due to border congestions in Kazakhstan and Poland and the container crisis. The challenges continue as large and small players invest in finding novel solutions to resolve the pandemic induced domino effect.
Changing with Pandemic
When the pandemic dismantled traditional processes, the resilient logistics industry fought tooth and nail to keep the machine running. It gave a chance to introduce new methods and technologies that are now becoming commonplace. The response to the risks brought by the pandemic was mitigated in various ways. Logistics players reorganised supply chain networks by prioritising key suppliers and recognising alternative suppliers, transport routes, distance and time. Furthermore, predictions and AI are emerging to be the future of logistics networks. Having relevant information at all times is critical for logistics companies.
Second, the pandemic required lesser and lesser physical handling of cargo due to labour shortage and the need for an efficient process. Robotics will play a significant role in warehouses in the near future, especially in developed logistics spaces. The demands of the future will require forwarders to adopt efficient technologies in the day to day process as a way to build faster and more robust supply chains. Third, the pandemic caused a severe shift in consumer behaviour as e-commerce took to the fore. Cost, capacity and efficiency are the focus of first and last mile haulage. Keeping track of changing consumer patterns can give a logistics company an edge over others. Finally, until the pandemic ends, logistics providers need to adhere to high safety standards as the industry itself is a high networking one. Social distancing, screenings and temperature checks are part of the new normal for everyone from the dock workers to the General Managers in any logistics set-up. The demands are rigorous, and rigour can only be mastered if the supply chain industry is resilient.
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