man wearing gloves and mask holding out package

The Effect of COVID-19 in the Logistics Industry

April 15, 2020 josh

How is COVID-19 affecting the logistics industry?

  1. Limited movement of goods
  2. Job losses
  3. Decline in manufacturing
  4. Fewer imports

 

In this unprecedented time where a global crisis is taking place, many areas of different economic systems across the world have undoubtedly been impacted, in one way or another. Many countries’ governments have imposed a necessary quarantine or a lockdown in order to mitigate the spread of the virus, including the Philippines. Authorities are now focusing their resources on formulating action plans to ease the burden on frontline workers. Having said that, one cannot also deny the grave effect of COVID-19 in logistics.

It doesn’t take a person to have to walk too far just to see how badly this kind of health crisis is impacting everyone and the different economic sectors, specifically the logistics industry. As of the moment, the state of the retail industry in the Philippines is stagnant. Malls and other major and popular shopping establishments have had to shut down in an effort to prevent the spread of the virus.

With a lagging retail sector, the logistics aspect has been sorely impacted as well. Continue reading to learn more about how the COVID-19 virus is affecting the state of logistics.

 

Limited movement of goods

man inspecting container van

When the pandemic was still in its early days and no quarantine directive was imposed, people flocking far and wide to different grocery shops across the country was a common sight. The reason for this is that many were stocking up on grocery items in order to prepare in the event that such a lockdown may take place — and it did! The result was the immense shortage of supplies of essential items such as face masks, hand sanitizers, disinfectants, and other kinds of hygienic products.

As such, one cannot deny that the limited movement of goods is one that has resulted from the pandemic. While it wouldn’t be farfetched to imagine that there are still functioning facilities that are making and transporting non-essential items such as clothing, accessories, bags, and the like, it cannot be denied that movement of goods has drastically been limited to food and essential goods.

In the Philippines, the Enhanced Community Quarantine has led to the cancellation of all forms of land transportation, in and out of regions of the country — save for private vehicles. With transportation limited to only special cases, logistics providers have had to also minimize the movement of the different carriers in their fleet.

 

Job losses

Another unfortunate outcome of the COVID 19 virus is the eventual decline in the number of jobs in the country. There was a specific report which highlighted that the country’s economy could generate losses of up to $1.94 billion, as well as, job losses in five major sectors, including that of the transport and logistics sector.

With the decline in the number of customers and clients, manufacturing companies have had to cut down on their costs to mitigate the impact of the virus on the business.

It is, unfortunately, the case that many of those in the logistics industry would experience job layoffs because the companies that they work for would no longer be able to financially sustain themselves. Because they do not have the luxury and the choice of working remotely, they are left with no course of action but to comply. The lack of capital resources with which to pool their salaries has resulted in this kind of cutting down on manpower.

 

Decline in manufacturing

workers in a factory

Similar to the ones already mentioned beforehand, COVID 19 is also affecting the logistics industry in that it has inevitably and unfortunately led to a decline in the manufacturing sector.

For example, looking through the lens of a smaller-scale supply chain command, a reduction in operation processes can be due to a decrease in the demand for a particular product. Consumers have begun to feel less inclined to spend their take-home pay, and instead save up in order to better equip themselves for the lockdown and maintain a lifestyle which can sustain them for the duration of the quarantine.

This kind of situation has led to a focus in certain sectors which will provide basic commodities to the people. While it is not entirely accurate to say that the food processing sector has seen a surge since the beginning of the quarantine, the reality is that more and more people have been stocking up on canned goods and other food items.

 

Fewer imports

If you’re running a small-scale business that incorporates a delivery service into its operations, you would understand how difficult it would be to procure items internationally. One possible reason for this is that companies might be wary of not having sufficient demand for the items they’re selling. As such, instead of stocking up on these particular items, they may decide to do away entirely with wholesale importation to avoid undesirable financial outcomes.

On a larger-scale and more public level, on the other hand, governments have instead turned to the importation of COVID 19 testing kits. They have redirected their funds towards curbing the effects of the health crisis on the public, and ameliorating the conditions of those already suffering from the virus.

 

Key Takeaway

The significant effect of COVID 19 in logistics is something that cannot be denied. This health crisis has impacted the different sectors of the logistics industry globally. It has restricted the movement of carriers, reduced the manufacturing operations of certain goods and products, limited the number of employees, and the like.

The ones presented above are just some of the many aspects which are affected by this global health crisis. With the persisting problem, the logistics industry has definitely had to make changes and certain adjustments in order to cope and adapt to a drastically changing environment.

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