It’s the biggest question everyone is asking right now: how is the Coronavirus pandemic going to impact business moving forward? What logistics trends should we all keep an eye on to help us navigate this new landscape?
We’re already seeing major shifts in the logistics industry due to COVID-19, and we anticipate this will only continue its trajectory after the stay-at-home directive has eased up across the nation. At this point, it is safe to assume that most businesses will be looking to build stronger and more resilient operations throughout the remainder of 2020.
In this blog post, we are going to take a look at the five new logistics trends we anticipate to see on the rise in the immediate aftermath of COVID-19.
Globalization Will Take a Back Seat
Prior to 2020, globalization was constantly and radically on the up-and-up. International trade was considered the best way for businesses to source and produce items while maintaining a strong global market.
However, since the shut down of borders to trade and travel since COVID-19, businesses have shifted, at least temporarily, to sourcing and producing local goods.
Businesses don’t feel secure that their goods will be able to come in from other countries, so it’s a lot safer to shift towards products that just need to cross state lines. There are also more restrictions on goods traveling internationally, especially with regards to cleanliness and safety practices, and businesses just don’t want to have to deal with all of these guidelines if they don’t have to. Sourcing locally is easier as all the uncertainty around international relations toes the line.
At the same time, a lot of consumers are also looking for locally sourced goods to support the national economy—more so than the care for the international economy. Some people are “going local” due to fear (like fear of the virus or “warfare” coming in from other countries). But more so than that, Americans are just looking to support one another in a stronger and more impactful way than they have in the past. It’s a greater awareness for the country collective, and Made in the USA is going to be an even more popular label moving forward for Americans.
For logistics, this means there’s going to be an emphasis on more local shipping and movements. We’ll likely see an increase in demand for trains and trucks across North America, which may put a deeper load on an already overloaded transport system. This is thus calling for changes in the way we can optimize freight movement to ensure every truck is full, drivers are happy, and logistical resources are being used most efficiently.
Buyers are More Price-Conscious
With such a major economic shutdown, a lot of people are focusing more on how they can save money in any way they can. As far as logistics trends are concerned, this is one that is always fairly constant.
People are still shopping online at the same rates as before, but they’re becoming much more aware of shipping costs and return options. They want their same goods, but they’re looking for deals. And since it seems like life is on hold with quarantine, consumers are also willing to wait until the price is right to get what they want, like waiting for free shipping or sales from their favorite companies.
A lot of businesses have decided to offer free or low-cost shipping as an incentive to keep consumers purchasing from them. For shippers and transport companies, this means they’ll likely start to see a lot of their clients looking for lower shipping prices. We anticipate a new wave of long-term, low-cost contracts between retailer and shipping partners looking to push a greater quantity of goods at even cheaper costs.
Overall, this spurs a chain reaction that will have a major impact on the efficacy and speed of the supply chain. Demand for lower-cost shipping means that logistics companies need to focus on high levels of route and resource optimization, which in turn likely means a greater implementation of automation.
Logistics Will Be Driven by Automation
Automation is the wave of the future in logistics. This isn’t news to anyone; supply chains have been moving towards automation-driven efficiency for a while. Now, though, it’s going to be even more critical than ever, and the push will be even stronger than before.
First, as mentioned in the last section, route optimization and reduced errors are going to be necessary in a world of local shipping and price consciousness. AI learning and the Internet of Things are the best way to ensure that resources are used most effectively to get goods delivered fast, on time, and with as little expenditure as possible.
Secondly, more and more people are realizing now that they want flexibility in their work. The work from home mentality is spreading across our workforce. More people will want to have flexible work shifts, which means robots can step in to perform on-demand tasks.
For example, warehouse automation will allow warehouse workers to focus on strategy and management. Self-driving trucks will allow drivers to do some of their paperwork on the road, so they’re not held up at rest stops or distribution centers. And while these things are nothing new, they are needed more now than ever before. What this demand born out of the need to survive in a new business landscape, comes quicker research and action.
Now is the time for companies to start implementing automation throughout the supply chain. In turn, they should also prepare to begin training employees to transition to new types of roles and titles as this automation will free up time and space on the road and in distribution centers.
There Will be an Even Larger Demand for Faster Delivery Options
People want cheaper shipping, while at the same time demanding faster delivery. During the COVID-19 quarantine, people have been doing all of their shopping online. Even groceries and medications are being shipped, within a few miles of a consumer’s home. Since customers can’t get that instant gratification of going to a store, they’re even more eager to have fast delivery to their home.
Despite the price consciousness, a lot of customers are actually willing to pay a premium for fast delivery services on certain types of items, especially personal care productions. Expectations for shipping have changed: people want fast, low cost, and at their door right when they want it.
This means speed and cost need to be balanced and optimized. If the shipping costs for fast delivery are too high, people just won’t buy from the company (and shippers will lose their clients). If costs are too low, margins are impossible to maintain. The right price means shippers can optimize on same-day delivery fees while their clients can sell a larger receipt of goods per purchase.
Risk Management Will Dictate the Supply Chain
COVID-19 has shown many organizations just how unprepared and vulnerable they are. Risk management firms have become the most popular B2B business and logistics trends recently as companies are looking for new ways to create flexible and agile businesses with an emphasis on resilience and hazard management.
We’re all looking for the best ways to centralize and standardize management of the supply chain to ensure there can never be another breakdown in business like we’ve just seen. For a lot of companies, this means better handling of potential upstream disruptions by diversifying their sources and transport contractors. It could also mean anything from employing more robots to implementing disaster plans.
There are so many ways to handle risk management, which is why it’s critical that supply chain partners talk to one another to ensure their management strategies are in alignment.
Getting Back on the Road
COVID-19 has had and will continue to have, massive impacts on business, consumers, and logistics. When, how, and how quickly the economy can restart will impact the way the freight market will move and recover. Until then, we can expect that logistical optimization is going to be in its crunch time—and companies need to get ahead of these logistics trends in order to keep up. Optimizing operations is even more critical to success than ever before.
Let Redwood Logistics prepare your logistics plan for you. Partner with Redwood to develop custom solutions for every area of your supply chain in a way that meets today’s supply chain challenges while anticipating what’s coming tomorrow.
Learn about our services to see what we can do to make your post-coronavirus business stronger than ever before.