In today’s uncertain times, information is now, more than ever, an increasingly important commodity. Disruptions to supply chains, caused by natural disasters, political unrest, terrorism and even global pandemics, are seemingly becoming more common and companies are now investing heavily in developing strategies to mitigate the impact of these ‘Black Swan’ events.
The most recent of these ‘events’, COVID-19, has changed how we live and work, with many suggesting that there will be no return to the old ‘way-of-life’. For many employees, a life of remote working has been the norm, whilst the closure of all non-grocery retail outlets has resulted in an explosion of e-commerce sales. 2020 saw an increase in global online sales of 27.6% to $4.28trn, more than doubling the previous year’s growth of 12.5%.
This has resulted a change in dynamics in today’s, and tomorrow’s, supply chains. Demand for certain goods have skyrocketed during the pandemic as homes have had to take on a number of new roles, e.g. offices, gyms, schools, etc. and those logistics companies best able to react to these changes and adapt their operations have fared best. On the other hand, those companies heavily reliant on a single sector have not done so well. One such example is a major European 3PL that has around 70% of its revenue derived from the automotive sector. The decline in car purchases, as many people worked from home and purchased goods online, as well as lack of demand for spare parts due to less accidents and wear and tear, saw both its turnover and profits decrease in 2020 – 20.6% and 18.3% respectively.
The true economic toll of the COVID-19 pandemic is extremely difficult to quantify, however, the World Bank’s semi-annual Global Economic Prospects report estimated that the world economy ‘could have shrunk by 4.3% in 2020’. Whilst this figure looks very dramatic, the report only measures the world economy’s fall from where it was before the pandemic, not from where it would have been had the virus not spread’. The World Bank’s projection for GDP growth, released before the start of the pandemic, was that the global economy would expand by 2.5% in 2020, to $86trn.Therefore, the shortfall of global GDP in 2020 may be closer to 6.6%, equivalent to about $5.6trn.
However, it is not just these major disruptions that cause issues and expense for the logistics sector. Companies are also plagued by a number of ‘everyday’ interruptions which cause unnecessary delays to the movement of cargo around Europe. These range from road works, industrial action, port closures, extreme weather, changes in legislation, fuel costs, etc. Unfortunately, whilst investment is being made to mitigate major ‘events’, less emphases is often made on day-to-day disruptions and the development of rapid contingencies to overcome these.
The Department for Transport in the UK estimates around 2.5m roadworks are carried out each year in the country, costing the economy around £4bn in increased costs to businesses through late employees or missed deliveries. In addition, industrial action not only delays the movements of products but also has a financial impact. For example, the one-day strike at the Port of Antwerp in February 2017 was said to have cost the port and other logistics companies millions of Euros. In December 2020, Paris retailers saw a 30% to 50% drop in sales due to a series of strikes in protest at a pension reform, which paralysed the transport system, hit their revenues and led to costly disruptions.
In order to assist companies in identifying the likely disruptions to their European distribution networks Ti has developed a Market Monitor service. This monitoring service can be run on a weekly, monthly or quarterly basis and allows companies timely access to data that enables them to put contingencies in place, minimising any interruptions to their operations and reducing the delays of deliveries to customers. Each monitor can be tailored to an individual company’s specific needs and our team of specialist Research Analysts not only collate the required data but also develop a format most suitable for each particular client.
Source: Transport Intelligence, July 29, 2021
Author: Transport Intelligence
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