Looking at the Remainder of 2020 in the Logistics Industry

Looking at the Remainder of 2020 in the Logistics Industry

By Len Batcha,
President
Technical Transportation, Inc

January seems so long ago, and like a different world. In many ways, it was.

When we wrote our Supply Chain Outlook for 2020 blog earlier this year, we were worrying about driver shortages and electronic logging systems, among other hot topics. The coronavirus, or COVID-19, was still in its infancy and confined to China at the time.

But as we all know, that has changed considerably. With the global spread of the disease and subsequent economic shutdowns and quarantines, our industry has also changed considerably, albeit hopefully temporarily. Most logistics companies today have 20-40 percent of their business on hold, and they're having to adapt.

The Trump Administration economists were originally anticipating a V-shaped curve recovery for the economy, where things bounce back quickly after a brief downturn. But today, it seems the curve will be more of a U-shape, where the economy remains suppressed a while longer, but when it bounces back, the incline will be immediate and possibly overwhelming. Whether our industry is able to handle that remains to be seen.

In the meantime, not everything is bad in the logistics industry, and following are some of the trends we're seeing.

The Driver Shortage is Solved for Now

The industry has done a 180-degree turn from when we had a driver shortage to an over- capacity situation at the moment because of COVID-19. Thanks to the U.S. government's paycheck protection program (PPP), though, many layoffs in the industry have been prevented.

This surplus in drivers is good news in the sense that we'll be better prepared when the economy bounces back. In fact, if demand takes a more V-shaped curve, then the current driver surplus may not be sufficient enough.

And we do believe demand in many industries will bounce back in a big way. We just don't know exactly when.

A Focus on Training

Many companies are using this slower time to tackle items that may have been “nice to haves” previously, such as training, process reviews, and compliance initiatives.

At TechTrans, we're using this time to dig deep and review our logistics processes and update them where it's needed. We're also making them available on our learning management system (LMS), so employees and partners can review them online and document compliance. With this approach, we'll be in a lot better position to step on the gas and go without having to update or modify processes when activities increase.

The only downside is, you can watch a video or do virtual training on anything, but unless you're handling that product and experiencing it in real life, you won't develop true expertise on it. It's similar to buying a piece of ready-to-assemble furniture, which, if you're following directions, takes a long time the first time you do it. However, if you put together a second one, it would likely only take a fraction of the time. That hands-on repetition makes a big difference.

eCommerce Isn't for Everyone or Everything

We've seen eCommerce make big gains during the pandemic, but largely with consumer goods. Our concern is growing over one vertical market: the big-box retailer. With the shutdown, people have gone away from the big box retailer, outside of a select few that have more robust online operations such as Amazon, Walmart, Target and Home Depot. And while this trend towards more online purchasing has worked well during the pandemic, I don't think it will remain this high in the long term.

Once the pandemic is over, people will have a need to go outside, go shopping and get back to enjoying life outside the home. And the majority of consumers today still like the ability to see and feel things they are wanting to buy -- even if they ultimately purchase it online. We only hope retailers--big and small alike--can survive this ordeal so commerce can normalize again.

But for the logistics industry as a whole, we also have to be prepared for not only a possible huge shift in demand, but the need for a ready-to-go infrastructure that is able to meet that demand. Companies that can position themselves for that growth now will be ahead of the curve, no matter which shape it takes.