Transportation and logistics

How would you describe the impact of COVID-19 on your business?

Survey highlights

Sixty-five percent of respondents in this industry were from North America or EMEA, and 20% were from APAC. Overall, a higher number of respondents said they were in the react phase (27% compared with the 20% average), with a low number of participants in the recovery phase (37% compared with 51%). However, the number of respondents in the reshape phase is higher than the average (37% compared to 30%). Prior to COVID-19, 80% of respondents didn’t consider pandemic a key risk, but 40% of respondents had a pandemic plan in place. Sixty-nine percent of respondents said they have seen an impact on their business. Out of these, 24% are unsure of the long-term impact that the pandemic will have. Thirty-five percent of respondents expect the impact to last less than a year, and 42% expect it to last between one and two years. Every respondent agreed that their organization’s risk management response efforts were sufficient, but 43% thought more planning would have added value.

Industry insights

Nearly half (48%) of respondents faced issues in their supply chain due to a drop in consumer demand — much higher than the overall industry benchmark (36%). However, over a quarter of respondents didn’t see an issue in their supply chain, which suggests a link to those organizations that had plans in place in the event of a pandemic. Revisiting business strategy ranked far down on the list of priorities for this industry, which is surprising. Just-in-time distribution failed in many parts of the industry during the pandemic, and there is already evidence that manufacturers are moving toward a more localized supplier model with more strategic use of warehousing and inventory. This will reinvent supply chains, whether logistics companies like it or not. Like all industries, transportation and logistics will be looking for cost savings. This will be more challenging and therefore less profound than in other industries, because transportation and logistics is an asset-intensive industry. White-collar workers make up the minority of the workforce in this industry and will likely be rightsized during 2021. The third most significant reshaping strategy for this industry was maintaining or increasing revenue and, within this, the use of new technology. Logistics has been transitioning from manual to digital for some time now, retooling to meet the needs of e-commerce. As more tech-savvy startups begin to flood the market, some of the bigger players will likely turn to M&A as a strategy to accelerate the adoption of technology. Geopolitical tension tops the list of future shocks for transportation and logistics companies. In addition to the uncertainty triggered by major administration changes around the world, the retrenchment of some companies from China, as they look to shorten their supply chains, will exacerbate this issue.

Proportion of organizations facing supply chain issues

Economic disruption remains a key concern for the sector, despite the sector benefiting to some degree from the decline in in-person shopping and an apparent shift in consumer behavior. Whether this is a shift for good will become more evident over the coming year. Business model disruption ranked fourth behind another health crisis. Continued pressure from non-asset-based providers will see an acceleration in the adoption of AI and blockchain to bring efficiencies. Today, the logistics industry is a high-risk operation. As it transitions further into digital and automation, some of this risk should lessen. But growing exposure to cyberattacks and interruption will undoubtedly take its place.

Future shocks

  1. Geopolitical tension
  2. Economic disruption
  3. Another health crisis/pandemic
  4. Business model disruption
  5. A major cyber event