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Coronavirus Testing the Resilience of Transportation and Logistics Providers

Transportation and logistics providers tend to rebound quickly when supply chains are disrupted by severe weather events and natural causes. The global COVID-19 pandemic is a very different type of disruption.

A survey by the Institute for Supply Management, released on March 12, found nearly 75% of respondents had already seen coronavirus-related transportation disruptions, and more than 80% expected to see some impact.

In addition a survey conducted by CNBC Global CFO Council the week ending March 16, took it a step further with respondents citing three-and six-month windows to get business back to normal once the issues end. Of those responding, 25% indicated it would take six months to bounce back.

One-third of CFOs taking the CNBC survey indicated it is still too early to know if there will be significant supply chain disruptions. The council comprises some of the largest public and private sector companies, among varying sectors, from throughout the world.

Yossi Sheffi, professor at the Massachusetts Institute of Technology and director of the MIT Center for Transportation and Logistics emphasized that nobody knows the depth and breath of potential supply chain disruptions, stating that the economic issues are totally driven by public health issues.

To recap, in early February, a novel coronavirus epidemic was seemingly isolated to the Wuhan district of China. A few weeks later a pandemic put a global strain on the economy.

By late February, the impact to freight volumes in the U.S. seemed almost minimal, but that was likely due to remaining inventory built up in the states prior to the tariffs of the Trump administration taking effect last fall, said Robert Voltmann, president and CEO of the Transportation Intermediaries Association (TIA).

As of now, the real danger to the supply chain and the U.S. economy is if people continue to panic, added Voltmann. This could throw the economy into a deeper and prolonged recession.

As March comes to a close, the spot market has seen an unprecedented increase in the number of loads as shippers scramble to restock retailers. Once the current surge precipitates, economists are predicting the industry will enter a sharp recession that will stop short of being catastrophic, with a potential bounce back later this year.

 

Planning for Continuity

Aside from the economic impact, the COVID-19 virus outbreak has shown the necessity of business continuity planning to not only prepare for natural disasters but for moments like now, Voltmann said.

To that end Gartner, the global research and advisory firm, recently conducted a webinar, “Business Continuity Management: Pandemic Planning Briefing,” covering 10 steps for pandemic preparedness, crisis management solutions as well as the power of data and analytics.

The webinar, now offered on demand, explored the critical nature of technology for heightened business success.

TIA’s Voltmann is looking ahead to the day when the pandemic has passed, seeing possible long-term benefits to transportation and logistics from an increase in domestic transportation as more products are sourced from North American suppliers.

He called it a clarion call to U.S. manufacturers to bring supply chains back to North America, noting the COVID-19 virus as the second one originating from China in the last 10 years.

Like other industries, transportation and logistics has canceled travel plans and annual events to stem the spread of the COVID-19 virus. The Mid-America Trucking Show, scheduled for late March 2020, was among the casualties. On March 18, TIA postponed its annual Capital Ideas Conference from April to August 19-22 in Austin, Texas.

In light of the coronavirus and in its wake, successful carriers and 3PLs will continue to confer with their hardware, hosting and software solution partner to identify existing products to save money and keep goods and services moving. Take advantage of Trimble Transportation’s expertise today.