We are a bit more than halfway through 2020, and it is now that we can talk about the freight transportation trends for the year. The pandemic has impacted almost every business sector, and with that, there has been a dramatic shift in trucking services of the world.
There’s no curve anymore, it’s a flat line when we talk about economic growth. Now that the world is opening up post COVID, all business sectors are trying to lift the line. So, amidst all these post pandemic tries and tales, where do logistics & transportation services lie?
How would the rest of the year and 2021 look for shipping & logistics companies? Well, it’s still difficult to paint a definite picture, but we are not here to talk about that. We are here to see where’s the flow moving, right?
Let’s see the logistics general trends followed by operational shifts for 2020-2021!
In The Future of Logistics…
1. National trumps global
International trade was at its peak before the world was hit by the pandemic. It has helped a lot of businesses to keep their production costs at minimum by sourcing their materials from across borders.
However, the scenario has toppled completely. The merchants are not sure if they will get their goods in time, and if they’ll be of the same quality as before.
Moreover, with every country’s economy taking a hit, consumers are preferring brands that source goods locally, supporting their own economy.
Such factors have already affected international logistics, and may continue to do so until there’s a significant development in the economic sector. It seems national freight may trump global transportation for a while.
2. Buyers may choose price over loyalty
Whenever there’s a crisis, like marketing, the department of logistics & transportation services are told to cut budgets. The pandemic has forced people to dip into their savings, and there’s no way they would be forgiving for shipping costs.
As a result, the businesses are forced to look for cheaper logistics & shipping companies. We are anticipating a flood of requests to lower the rates, even from the long-term clients who never compromised on their logistics standards.
Of course, this chain that begins with the end-consumer might affect the efficacy of shipping companies. The logistics companies may have to invest more in optimizing routes and resources.
3. Automation may become the driver of the industry
It has been a while since automation has seeped into the logistics industry, and is doing fairly well. Like we discussed, it is going to be crucial for the shipping companies to optimize their routes and resources. And, AI is the answer for the scale of optimization and quality that the industry needs today.
Moreover, with automation taking the wheel, the drivers can make the vehicle their working space and do all the needed paperwork before reaching the destination.
While there’s an absolute need for self-driving trucks, and in-house automation, the industry looks keen on implementing that need.
4. Faster delivery will be the priority
Speed is no more a feature in any of the industries. And when it is the logistics & transportation services that we are talking about, there’s no substitute for ‘Faster’ delivery. Speed has become a necessity, and an asset.
Brands are promising one-day deliveries to consumers, and the load of that comes on the shoulders of the logistics and trucking companies. The current logistics clients are more or less from the pharmacy or the medical industry. And both are always out of stock due to panic buying by the end users.
The companies which will show their might in delivering in a flash, may emerge as victorious after the pandemic.
“The global logistics market size is projected to grow from USD 2,734 billion in 2020 to USD 3,215 billion by 2021, at a Y-O-Y of 17.6%.”
Let’s Talk About The Trends in Different Modes of Transportation 2020
1. Logistics and Transportation Via Air
As I mentioned earlier, international trade was at its peak, and with that, the demand for air freight was on all time high. The growth in freight capacity of the air vessels kept the rates down in the last year.
But then came the spiked virus, and the countries closed the borders. People stopped traveling, and the businesses came to a halt as well.
With a decline in demand, the capacity of air freights decreased, and the rates soared. At this rate, the trend that we could see for air logistics is that the businesses who preferred air freights may shift to ocean freight. It has been an unstable year for the aviation industry, be it passenger or cargo.
2. Logistics and Transportation Via Ocean
Environmental factors have affected almost every business, but ocean logistics have had to go through a major shift because of that.
As we entered 2020, the International Maritime Organization implemented IMO 2020 regulation, which banned ships operating on fuel with more than 0.5% sulphur content.
This increased the operational costs for ocean logistic and transportation companies. As a result, the shippers had to pay environmental surcharges.
COVID-19 brought another storm in the ocean freight, slashing the capacity of the carriers. And as a result of that, increase in the rates.
However, with the surprise factor of the pandemic, the ocean shipping industry had to haste the digital transformation. Several port operators are increasing their speed in including robotics to optimize their operations.
3. Logistics and Transportation Via Road
Automation is still on table as far as trends for road freight are concerned. There is a long way to go for complete automation in the field, but Covid will definitely be a reason to push the process.
Trucking has always been an indispensable mode of transport, especially during the pandemic. There is a driver shortage because of safety concerns, which may give a wider way to automation than anticipated.
Platooning is another trend that we may see hitting the roads in full capacity by the next year. Platooning is creating a chain of two or more trucks linked using automated connections in a convoy.
This trend may take off in this year itself because of the driver shortage. However, it is yet to be seen how things pan out.
4. Logistics and Transportation Via Rail
All the decrease in capacity of the air and ocean freights has led to an increase in the logistics scenario of the rail.
Cross-continent exporters have shifted to intermodal logistics and transportation services as air and ocean logistics have several factors not in the favor of the exporters.
It is possible that logistics and transportation companies may use the mode of rail for global shifts.
The current logistics and transportation scenario may show these trends, however, there’s always a waiting game involved. This sector is heavily dependent on the production economy, and with COVID still affecting major businesses around the world, we need to wait and watch how the importers and exporters choose to use the logistics channels.