Restart or destruction? Logistics and the pandemic

The coronavirus pandemic affects the logistics sector to a large extent. Besides protecting their own workers, logistic companies have to be very flexible. On the one hand, they are essential to supply the population as they make sure that hospitals and pharmacies receive medicines and medical devices. On the other hand, the economic downtime has resulted in disruptions in many supply chains. And, for many small and medium enterprises, that poses an existential threat.

High speed for the rapid test | logistik aktuell

DB Schenker is bringing hundreds of thousands of rapid test kits for Korean manufacturer SD Biosensor to customers around the world by air freight.

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End of cheerful growth

The careful re-opening of social and economic life is showing the extent to which the logistic sector has been affected. Logistics specialists who have investigated the consequences of the coronavirus crisis in the industry point out that “the times of unlimited freedom and cheerful growth are over”. The crisis will affect the entire market and will lead to many bankruptcies. “The industry will have to adjust, but it will not be destroyed”, claims Prof. Dr. Christian Kille, from the Logistics Department of Hochschule Würzburg. “In the future, the growth driver of the sector will not be globalization, but the demand from domestic markets in Germany and the European Union.”
Therefore, issues like safe supply chains, risk management and, of course, double sourcing, will become more important for companies. As for digitalization, the advances in the sector are not obvious. Even though this issue has proven to be essential, it is still unclear whether the budget for a strong digitalization is still available.

Transparency and communication are decisive factors

Hence, logistics specialists are in a difficult situation. Planning processes and forecasts have to be adapted to the new reality. “We are taking into account different scenarios that range from Best and Worst Case in order to decide if an investment makes sense”, says Jochen Thewes, DB Schenker’s CEO.
In the future, transparency and communication will be the decisive factors to be able to react quickly. Those who have the best data and analysis will have an enormous competitive advantage.
“Companies will be ready to invest more money to strengthen supply chains”, says Thewes. At the same time, the demand will clearly change —not just the type of demand, but also its form and development. Furthermore, the crisis will change logistics networks and supply chains. “When everything came to a standstill in China, the supply chains of many companies collapsed,” says Thewes. “The lesson to be learned from this will be to diversify the supply chains of production or suppliers and make them more secure.”

“The market will change after the pandemic: Transparency and communication skills determine our future. #DBSchenker“

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Social changes

Many analysts think that the coronavirus pandemic will bring even deeper changes. “The world after corona will not be completely different, it will have a new form made out of old elements”, says Matthias Horx, from Zukunftsinstitut in Hamburg. That will also have an impact in the logistics sector. “The cost of this service will increase, and the sector will need to be valued more”, says Horx. His conclusion is that “the entire society will have to get greatly modernized”.

Will the coronavirus pandemic influence your logistics business?