The first wave of the Covid-19 pandemic has not yet properly come to an end, and preparations are already being made for the return of the virus. In particular in the transport sector. Is the logistics industry flexible enough to cope with a second Covid-19 wave?
According to the latest OECD Economic Outlook, the Covid-19 pandemic has triggered the most severe recession in nearly a century. GDP in the European area is expected to plunge by over 9% in 2020 – even if a second hit is avoided. Likewise, GDP in the United States will take a hit of 7.3% in a single-hit-scenario. In a renewed outbreak of infections, GDP might shrink by more than 11% in Europe and almost 9% in the US. For Germany, the report classifies supply chain problems, which might slow down production in the automotive industry, as a major risk of a second Covid-19 wave. The high unemployment rate prevailing in the United States will weaken consumer demand in the longer term. This might have direct consequences for the demand for transport services, the outlook says. This clearly demonstrates the major role resilient and flexible supply chains play.
Second Covid-19 wave: Logistics is getting ready
The coronavirus pandemic has clearly highlighted the importance of smooth logistics operations for our society. The whole sector had to face numerous challenges. Many transport companies, carriers and logistics service providers are now getting ready for a possible second Covid-19 wave. Some companies are even changing their business model.
A model company in terms of reducing the impact of the pandemic is the Hungarian logistics company Waberer’s International Nyrt (Waberer’s). With a fleet of more than 4,100 trucks and 7,600 employees, the company is one of Europe’s market leaders in international full truck load transport (FTL) and the Hungarian market leader in the field of domestic freight and complex logistics services. At the beginning of the Covid-19 pandemic, Waberer’s introduced immediate cost-cutting measures to maintain short-term financial stability in the changing environment. As a result, the company was able to offer a stable and continuous service during the critical phase of the lockdown.
Tibor Dudola, Strategic Buyer at Waberer’s International, believes his company is also well prepared for a second wave: “In this situation, flexibility and speed in meeting changing market needs are most important. This applied both at the beginning of the pandemic and during the recovery phase. In our opinion, the European logistics market will be severely affected in the medium term.”
For this reason, the company has decided to change its business model in the “International Transport” segment with immediate effect. The new strategy places contracted customers and the most important European trade lanes at the center of its activities.
Dudola explains: “Our ‘trade lane’ model will focus on the main trade flows within the European Union and replace the existing ‘taxi model’. We will focus our business on contracted customers to provide them with more stable and reliable capacity with a higher quality of service”. In order to be able to continue to serve customers with existing traffic flows outside the trade routes, the company is also investing in its freight forwarding business unit. In this way, it is expanding its geographical coverage and range of services. Dudola emphasizes: “Our strategy is aimed at developing Waberer’s International Transport segment into a more customer-oriented, flexible and financially stable company.”
Getting the best out of the worse
DB Schenker is almost a synonym for global freight exchange. In the 2019 financial year, the company generated total turnover of around 17.091 billion euros. Schenker Deutschland AG is the leading provider of integrated logistics in the German market with a turnover of around 4.1 billion euros in 2019. What is their strategy to get prepared in times of coronavirus?
Erik Wirsing, Vice President Global Innovation at DB Schenker: “We have all learned a lot and at the same time demonstrated great improvisation skills. For example, by changing quickly and successfully to remote working and the use of cloud services. This would have been much more complicated five years ago.”
Wirsing points out other important aspects in logistics: “The redundancy of the network is important. If there is a deadlock somewhere, for example due to coronavirus safety measures, we are able to handle the shipment via alternative routes, other districts, regions or countries. It is also a matter of adjusting the traffic flows daily – depending on the extent of the shutdown. No problem for PTV solutions, though. More than ever, we need to act flexibly and be more agile in logistics. And the will to learn. In our case, most things worked out really well in the first wave of the pandemic. But we would certainly be even better prepared for a possible second Covid-19 wave.”
He adds: “Of course, Schenker also needs to keep a huge network up and running. The crisis has made us aware of how important IT is. However, especially in times of crisis, new business models emerge. Now is the moment to question things, to change things, almost like after a cleansing thunderstorm.”
Not only at DB Schenker are logistics customers affected. Therefore, consulting is becoming increasingly important well in advance of the actual logistics service.
Tools help to position for the future
Effects of the crisis will accompany us for a long time to come. The situation is putting pressure on cost structures and familiar processes.
Tobias Häßler, Vice President CEE at PTV Group, is convinced: “The logistics industry will have to deal with the consequences of the coronavirus crisis worldwide – with or without a second Covid-19 wave. Trucks have long been used as mobile warehouses. If production volumes fall, the required transports will also fall. On the other hand, the transport sector plays a driving role for our society. Logistics companies that invest in digitalization and, at the latest now, set course for modern transport planning and strategic logistics, are better positioned for any case.”