Anticipating the impact of COVID-19 for logistics partners

This week, Lisbon, ESC Secretary General Godfried Smit will speak to Portuguese shippers on the challenges that COVID-19 brings to shippers and ways to anticipate the virus’s negative impact.

Coronavirus affects the world economy as a whole, especially logistics. Globalisation has led to welfare, although it has also made the supply chain vulnerable. This vulnerability can be seen through the impact of COVID-19 in multiple ways. We can already anticipate that it will produce blank sailings and a booking crunch, it will increase freight rates, it will lead to a lack of container capacity in high-density industrial port areas. Finally, it will create tension at certain shipping companies if not being financially healthy.

At present, a profit oriented view is the predominant policy, resulting in suboptimal solutions. With the inexistence of an efficient contingency plan, unforeseen disruptions only result in a bill to be paid by shipper. Therefore, supply chain partners should seek to solve the following four challenges:

1. To respect contract terms
2. To give more central position to the service
3. To change tariff structure
4. To anticipate future challenges

Following this advice will result in new models where profit is not the only driver and the shipping industry is responsive to customers’ requests regarding service and delivery. Besides, the industry should build safe cargo corridors and contingency plans together with all involved.