THOUGHTS

How Covid-19 is Affecting the Logistics Industry in North America

Apr 7, 2020

As the covid-19 pandemic continues to spread in the United States, logistics and supply chain operations are dramatically affected, especially in the North American region. Retail, industrial goods, and consumer packaged goods are some of the major industries that are hardly impacted by the coronavirus outbreak in North America. The supply chain disruptions will have both long-term and short-term impacts on businesses.

The changing government steps and quarantine measures could make it difficult for freight service providers to keep freight moving smoothly throughout the country for the coming weeks. This compels companies in the logistics industry to understand the demand impact specific to their business, create short-term demand-supply synchronization strategy, prepare for potential channel shifts, and conduct global scenario planning. Let’s have a look at the challenges faced by North American logistics companies and medical equipment shipping organizations.

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US Logistics Companies Concerns

The spread of the covid-19 pandemic is completely reshaping the global airfreight operations, as logistics companies are struggling to keep medical supply and other basic goods moving. To maintain profitability and ensure business continuity, some passenger planes have started to work as freight-only aircraft. This has helped some carriers hit hard by the coronavirus outbreak to continue operations. In the coming weeks, if there are no positive signs of relief, the North American logistics businesses will be completely impacted and the country will not be able to complete the shipping activities, even with delays.

After carrying out a thorough analysis of the North American regions, our market intelligence experts have put forth some key points on the impact of the coronavirus on the logistics industry.

  • Manufacturing companies could expect a delay of two to three weeks in supply and raw materials and parts for production.
  • As the situation is expected to remain fluid due to lockdown in several regions, shipping and delivery could become a new choke point for some industries.
  • The shutting down of global supply chains could lead to scarcity of day-to-day essentials in the North American region.

Medical Supplies and Equipment Shipping

The coronavirus outbreak is having major implications on the medical supplies and equipment market in North America. There is a rising demand for medical supplies such as N95 masks, hand sanitizers, and test kits. But, the supply chain disruptions are making it difficult for companies in the logistics industry to meet the rising demand for medical supplies and equipment in North America. The major reason behind these supply chain disruptions is the sudden drop in imports from countries such as China and Europe. A recent study shows that hand sanitizer and N95 masks imports dropped by around 50% within the last month.

To tackle this challenge, the United States is planning to ramp up domestic production. The United States has sought to collaborate with other nations to source raw materials to produce these items. This could potentially benefit companies in the logistics industry as they will require to distribute the supplies throughout the country.

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Strategies for Managing Supply Chain Disruptions

logistics

#1 Devise crisis management plans

Companies in the logistics industry must focus on devising crisis management plans to deal with interruptions in supply chain activities. Companies in the logistics industry must analyze factors impacting the dynamics of international supply chains leading to increased uncertainty in logistics operations at the tactical, operational, and strategic levels.

In addition to this, focusing on Tier 1 supplier risk, illuminating the extended supply network, updating inventory policies, evaluating alternative outgoing logistics options, and enhancing focus on labor planning is the key for logistics services providers to combat the impact of covid-19 with resilience.

#2 Categorize supply chain disruption strategies

For companies in the logistics industry to ensure business continuity, a comprehensive analysis of the supply chain is a must. Besides, qualitative and quantitative analysis of supply chain risk is also critical for companies to maintain their speed to market. Also, companies in the logistics industry must understand the demand impact specific to their business, establish a short-term demand-supply synchronization strategy, and evaluate alternative inbound logistics options.

#3 Adopt a new supply chain model

By leveraging advanced technologies such as IoT, AI, and 5G, companies in the logistics industry can anticipate and build contingency plans. In addition, these technologies can dramatically improve visibility across the end-to-end supply chain and support companies’ ability to resist sudden shocks such as the coronavirus outbreak. Besides, instead of making one city a manufacturing hub, the focus should be on smaller manufacturing hubs in different cities. Shortened supply chains will reduce coronavirus impact on supply chains and improve capability and innovation.

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