Logistics Trends and Outlook for 2021

By Len Batcha,
CFO/President of TechTrans
Technical Transportation, Inc

The year 2020 has been challenging for most of us in various ways, but we’re hopeful that 2021 will bring new possibilities and opportunities for us all. As we head into next year, there’s still a lot of uncertainty in the market, but with the coming release of the COVID-19 vaccine worldwide, we anticipate things will start to trend upward in Q2.

With that said, and from where we sit right now, I see several major trends and issues that we can expect to see next year. Following is an overview:

The COVID-19 Vaccine Will Dominate the Supply Chain Early On

As expected, everything around the new COVID-19 vaccines from pharmaceutical players such as Pfizer, Moderna and Astrazeneca will drive supply chain topics and priorities through at least the first half of the year. Companies within the pharmaceutical and manufacturing space will all be focusing their development efforts to find a way to play a role in this major endeavor.

In the meantime, I think mitigation efforts, including social distancing, sanitization and other preventative measures will continue to prevail until the vaccine has been well established in local communities.

Cold Storage and Cold Transport Will be Essential Services

We'll see a resurgence in service efforts of 3PLs to build out large-scale networks that focus on temperature control to keep vaccines at the required temperatures. This will include freezer farms, cold storage equipment, and temperature-controlled transport / vehicles.

There will also be pressure from end-users wanting assurances from shippers that the vaccines they receive have been kept safe. This will mean a surge in monitoring devices that ensure temperatures are being maintained at every stage of the supply chain.

Real-time Tracking Will Be a Requirement

The pandemic has also conditioned consumers to receiving real-time status updates on their purchases, and we believe this expectation will spill over to business buyers as well. This will include those purchasing complex equipment and technology.

This will likely translate to a big investment in devices and systems that can enable real-time tracking this year. Beyond tracking for vaccine delivery, this capability will become a requirement for any 3PL wanting to compete for business this coming year.

More Diverse Sourcing Partners Will Continue to Grow

Before COVID, the global supply chain was hit hard by tariffs imposed on China and other countries. The pandemic made the situation worse, causing lay-offs and furloughed logistics employees worldwide. Under a Biden administration, we believe some of those trade partners and foreign supply chains will be reopened, giving access back to suppliers and vendors that were cut off (most likely after Q1). We’ll also likely see more employees hired back.

However, one of the issues that surfaced from the tariffs and the pandemic is our over-reliance on China for the majority of our goods. The efforts started to find more diverse worldwide sourcing will likely continue to grow as companies put new contingency plans in place to help avoid future shortages, like we saw with the shutdowns last spring.

The Economy Will Stay Strong

We believe the economy will remain strong because consumer purchasing continues to remain strong. As an example, this holiday season saw spending off by only 1.1 percent midway through November compared to previous years, however, recent statistics show an increase in spending throughout the Holiday season.

The service industry domestically will still have the most uncertainty this year, including many small businesses and mom-n-pop stores. This is thanks to many big box retailers becoming omnichannel suppliers for everything consumers needed during the pandemic.

We believe, however, that small retailers will eventually make a comeback as shoppers look for more diversity in offerings and better service. This will be a hard road, though, for many small businesses--some of whom may never be able to recover from city-closure mandates.

Cyberattacks Will Be a Growing Threat

At this moment, we are experiencing a concerted and increased number of cyber-attacks and ransom-ware incidents throughout the industry, and we expect this to be a growing issue in 2021 as well. Logistics companies should ensure their IT infrastructure and technology are secure and communicate their security plans and policies to their stakeholders early in the year to build buyer confidence.

Driver Shortage Will Drive Price Hikes

Nationwide, carriers ranked the driver shortage as the No. 1 issue affecting the industry, according to a recent survey completed by the American Transportation Research Institute (ATRI), a nonprofit research organization of American Trucking Associations. The trucking industry has about 80,000 fewer available drivers compared to a year ago, due to the federal stimulus that increased unemployment benefits and “couched” a lot of drivers who discovered they could earn more by staying home than being out on the road.

In addition, the risks associated with COVID for an aging driver population drove many into early retirement. As many companies continue to play catch up from shipping delays experienced over the holiday season, the driver shortage will likely continue to affect transport times for the foreseeable future, while also driving price increases from an already stretched thin supply chain.

While 2020 threw everyone a major curveball, we are cautiously optimistic about 2021 as we look forward to new opportunities opening up, and a cautious return to a more business-as-usual environment toward Q3 of the coming year.