The Logistics Industry in a Post-COVID-19 World - Global Trade Magazine
  May 19th, 2020 | Written by

The Logistics Industry in a Post-COVID-19 World

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  • One of the first changes that must be implemented is that inventory levels are always high.
  • Looking for a fresh market without large competition might be a smart move.
  • Larger companies may hold a monopoly on the market.

The COVID-19 pandemic is slowly passing. However, we still have a long way to go before we can say we are safe from it. Nevertheless, these past few months were difficult, and it is safe to say that some lives were affected in such a way that they will be different forever. The same can be said for many industries that had to – and still have to – struggle with the pandemic in order to stay in business. My guess is that the logistics industry in the post-COVID-19 world will look a bit different than it used to.

Inventory levels

All companies that had low inventory levels suffered major setbacks. Being left without goods and without means of getting new supplies shipped is a disaster for any company.

With that being said, one of the first changes that must be implemented is that inventory levels are always high. Companies will have to factor in any possibility to protect their business if a similar situation arises in the future.

What about the supply chains?

During the pandemic, it was shown that one of the major disadvantages of stretched supply chains is that they can easily break at any point. You never know when the logistics department will fail to deliver, and your entire business is affected by it.

As a solution to this problem, companies will have to invest their resources into shortening the supply chain and making sure that the merchandise is transported from one end to the other in the shortest period of time.

Managing the workforce during high demand

We have witnessed how high demand for a certain product can create holes in the market if there is no possibility of restocking. For a short period of time, it was virtually impossible in some countries to get your hands on a bag of flour or toilet paper. When panic spreads, people often act without thinking.

The logistics industry in a post-COVID-19 world will have to invest in workforce management training during high demand season.

Many smaller companies will disappear

The COVID-19 situation caused many smaller logistics companies to bankrupt. Since only the larger companies that have higher inventory levels and better overall performance survived, they will invest in purchasing bankrupt businesses in order to expand.

This will lead to a change in the market, and competition will be lower as well. Since there will be a smaller number of logistics companies on the market, there is a possibility for a monopoly to develop. When only a few people share a greater concentration of power, they set the rules to favor them. This will result in surviving companies developing a competitive advantage in the global market.

There will be less money for the development department

One of the consequences of the COVID-19 pandemic was the financial loss that many companies suffered. People got fired, and paychecks were substantially reduced in order to keep the business running.

I am not sure if this will affect future salaries, but I can safely say that companies will try to keep more money in the system. The department of development, research, and innovation might not get the same amount of funding as in the past.

This step will help logistics companies to have a solid amount of cash to keep the business running if a similar situation occurs in the future.

How will these changes affect the prices in the logistics industry in post-Covid-19 world?

As I stated above, some of the major changes that will happen in the logistics industry in a post-COVID-19 world are shortening of the supply chain, securing higher inventory levels, and investing in workforce management to deal with challenging situations. Furthermore, larger companies may hold a monopoly on the market.

All of these steps require a lot of money. For that to happen, the prices will have to go up. It is unclear about the percentage, but it will happen.

What can you do as an owner of a small logistics company?

Owners of small logistics companies will have to find a way to keep up with this situation or perish from the market. If you are among them, here is a little advice on how to prevent this from happening to your business.

Make partnerships

This might be a decisive move, but making a partnership with other companies in the same situation can increase your overall strength on the market.

Try moving your business elsewhere

Looking for a fresh market without large competition might be a smart move. Many companies may decide to move to a smaller area, or even to a different country, in order to increase their business. A company might make the transition less painful.

Big changes are coming!

As we can see, big changes are coming in the logistics industry in the post-COVID-19 world. As always, when an economic crisis occurs, only the stronger ones will swim out on the surface. Nevertheless, that does not mean that others will lose their plays on the market. Informing yourself in advance will help you prepare for the upcoming changes, and maybe even save your business! With that in mind, spend your time on research that will help you keep your business running. Stay safe and good luck!

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John Palmer is an economic expert with over two decades of experience. Working as a freelance blogger, John uses the opportunity to reach out to a wide group of people and educate them on how to manage their business in a challenging situation. However, he does branch out into other areas, as he also writes for moving companies such as Easy Move KW. Some of his other interests include business startups, management, and business continuity.

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