Logistics in 2020-2021. Life after the Pandemic

Marketing Research and Analytics Departments of TELS Group carried out a marketing audit of the transportation industry developing in new conditions. The report presented to company’s top managers provides the results of trend analysis of transportation and logistics market, capacity assessment for different market sectors, the behaviour of the industries in crisis situations, development forecasts and the capacity of the transportation market for different modes of transport and transportation directions.

This article summarizes one part of the report on the market trends that have been developing more rapidly as a result of the pandemic and will be shaping the future of transportation and logistics.

Unfortunately, the pandemic is still in full swing bringing great changes to the whole world, and these changes are sustainable. What tasks, meanings, goals and forms of interaction does the new world have for us?

Business transformation and changes in supply chains

Transportation and logistics as many other industries is facing rapid transformation processes. The COVID-19 pandemic has brought dynamic changes to automation in workspace speeding up the digital transformation of the industry by several years. Businesses have several transformation paths:

  • Modernization of interaction points in supply chains and creation of digital interaction with customers when handling the orders and transporting goods.
  • An uplift in B2B online sales implying changes in the type of sales, digital transformation of service standards leading to communication anonymization, which results from its automation.
  • Placing transportation orders from a mobile device. “Digital” freight forwarders become market players.
  • Even when the pandemic ends, remote work will remain and e-commerce will continue to develop.
  • Increase in online marketing and online activities (all the logistics events worldwide will become digital).

Logistics companies need to adapt to the changing conditions quickly. Some trends that emerged during the pandemic will remain in the post-crisis period having a significant impact on transportation and logistics worldwide. We might expect:

  • Increased complexity of supply chains, changes of routes, “natural selection” of market participants, increased competition.
  • Development of domestic markets and supply chains (return to domestic production during the pandemic).
  • Increased demand for groupage cargo services.
  • New possibilities for rail transport.
  • Emerging demand for the delivery of goods to remote places within Russia.
  • Growing demand for environmentally friendly solutions.
  • Changes in business volumes in various industries (stably, for example, in food, retail, FMCG and pharmaceutical industries).

The world of transportation and logistics will never be the same when the pandemic is over. But the companies following the trends and quickly adapting to the changing circumstances will control the situation, create top requested services and strengthen their capabilities in business.

What should transportation companies do?

Overcoming the existing crisis is a great challenge for management teams of all the players in the logistics market. It is important to develop further strategy quickly, which requires the resources of an entire team including lawyers, financial experts and economists. Along with this, it is necessary to rethink partnership relations with contractors, review contract terms and obligations and work carefully with current assets and liquidity.

Summing up and drawing a sort of a master plan, the following four major business development strategies that should be solved at the project level can be identified:

1. Creation of an ecosystem in transportation and logistics allowing to connect innovative and popular services taking into consideration competitors’ inventions and customers’ requirements. For example, digital interaction with customers, automatic confirmation of orders, online tracking, etc.

2. Transition to customer-oriented business models in an increasingly competitive environment. Development of new skills – customer-manager = logistics architect.

3. Anti-crisis strategies – in the event of unfavorable conditions, there will be a proactive response implying instant refusal from unprofitable products, cost reduction and redistribution of resources.

4. Total automation – everything that can be automated must be automated.

Sources: DHL Radar, BCG, PwC, RBC, SeaNews