Logistics industry reacts to COVID-19 disruption
10 April 2020
Research from Transport Intelligence (Ti) finds a global contract logistics market facing a downside cliff edge in 2020.
COVID-19 disruption is predicted to strangle production and freeze retail. The research finds COVID-19 has thrust the global contract logistics market into a near unprecedented state of uncertainty.
Transport Intelligence says: “Having expanded by a very solid 3.5% in 2019, the contract logistics market achieving such a growth rate on 2020 now appears impossible, even though less than one quarter has passed. Ti’s research finds that, in a scenario of rapid and sustained global success in the fight against COVID-19, the global contract logistics market may still achieve a 2.0% growth rate in 2020. However, should there be a failure to do so, a prolonged epidemic would lead to a severe market downturn. Under these conditions, a global recession would be the backdrop against which the contract logistics market is projected to contract by 10.2%.”
Alongside the global growth projection, Ti also analyses the impact of COVID-19 scenarios across the European and North American markets as well as in 12 individual countries globally. The growth projections reveal significant and varying degrees of risk, and the range of growth potential shows how much is at stake for retailers, manufacturers and contract logistics providers in 2020.
“It already feels like a very long time since 2019, which despite not always being a straightforward year for contract logistics – particularly as automotive sales struggled – was actually quite a positive year in growth terms,” said Nick Bailey, Head of Research at Ti. “The big challenge this year though is obviously the spread of COVID-19 and the unprecedented response we’re seeing to it on a global basis. It’s all but inevitable that we’ll have a global recession this year, and contract logistics will suffer. Optimistically we might see a quick recovery as the economy, supply and demand all bounce back and growth returns, but the downside risks are potentially dire for the market.”
Logistics firm AMCO added: “We're all seeing the impact on supply chains around the world and in particular the way the restrictions on the movement of people has impacted on the airfreight industry. European companies increasing their stock levels in anticipation of a shutdown has resulted in a shortfall in capacity and quoted rates growing dramatically.
“However, while many companies across Europe temporarily close for business, the situation in China appears to be improving. The good news is that many cities are reporting no new infections. Meanwhile, our government continues to implement safety measures which are relatively new to us in Europe (hand sanitiser, face masks, social distancing).
“Interestingly, from a survey of 6000 shippers across China, over 50% report that they are back to full production, and in some provinces, levels are over 90%. Local transport and port terminals are also getting back to normal, with far fewer vessel cancellations.”