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Aeolus Perspectives 14th Edition: COVID-19: what has T&L learned by all this? Lessons and suggestions from the emergency management.

05-05-2020

Truck on the road

The management of the COVID-19 emergency set new benchmarks and also challenges for future transport and logistics operations. Solid partnerships and strong cooperation with all the providers and actors in the supply chain can prove to be crucial for a more flexible and efficient model.

The COVID-19 pandemic will leave us not only painful memories and a long tail of fear, but also a legacy in terms of knowledge and good lessons to save. Some of these deal with transport and logistics (T&L). During the long days of the lockdown, the circulation restrictions, the enforcement of social distancing, and the other measures occurred led to people exploring the huge possibilities by digital to satisfy their need for information, entertainment, socialization, remote working, and even also purchasing of essential goods. In a few weeks, many steps to make true the Digital Society has been done. The global demand for social media, internet telephony and conferencing, home banking, video streaming, and most of all e-commerce and home delivery has dramatically ramped up. According to a Nielsen survey, in Italy, the first European Country in lockdown due to COVID-19 pandemic, during the week between February 24th and March 1st, the online sales for Fast Moving Consumers Goods increased by even 81%, so 30 percentage points more than the previous week. On March 17th, the Dutch online magazine Logistiek.nl published its prediction that e-commerce is expected to grow by 50%, with Digital Commerce also reporting a 52% increase in online sales and even an 8.8% increase in e-shoppers since the coronavirus crisis began.

E-commerce and home delivery have been critical to supporting business for those companies which have been mainly damaged by lockdown restrictions (i.e. fashion brand and retailers). However, because of the sudden surge of e-commerce and home delivery requests, T&L has faced an absolutely unscheduled and difficult to foresee demand for services. So, the COVID-19 pandemic has put to the test transport and logistics services like no other recent event before. The impacts have been strong on many supply chains, especially those of e-commerce and basic needs companies. Unexpected stock reductions and then delays in manufacturing and shipping have followed up to the sudden spikes in retail purchases and online orders. In a second moment, a slowdown in orders has occurred as products have gone out of stock and, at the same time, marketplaces have set a priority for the essential goods. The increase in management complexity within the warehouses - because of the lack of available human resources and the new workplace safety requirements set by law - has gone to add to the difficulty in carrying out international and long-distance transport.


Beyond the aftermath of the contingent emergency, what thus will remain of this dramatic experience? What instruction or even lesson can be taken from all this? First of all, the step has been definitely done and it is not possible to come back: e-commerce has now taken hold also in those countries that seemed immune to its charm and reluctant to embrace this option before the emergency started. In the long weeks of the lockdown, consumers around the world have experienced the benefits of digital consumption and services such as home delivery, remote working, and so on. And most of them will not want to go back. Therefore, Companies can not consider the digital option a "nice to have" anymore. It is rather now an absolutely "must".

Then, the role and the relationship between consumer and retail will change probably irreversibly. More and more, physical and digital will mix and match in the overall customer experience. Due to this, the Retail approach to the market will evolve radically. The physical store will have a new and fundamental role in supply chain both for enhancing the brand experience and supporting logistics as well:  not only sales point but logistics hub - the final link in the distribution network because of "click 'n' collect" and "click 'n' drive" services, and even also proximity warehouse serving the last mile distribution or the picking activity for retail e-com orders. Then, the mix of services chosen by the consumer will further be expanded to include more and more home delivery, road delivery, PickUp DropOff (PUDO) points, and lockers.

For what about operativity, the COVID-19 emergency management let two important notes. First, e-commerce pure players seem to have better faced the challenge of serving the digital market demand. So, having signed agreements with multiple T&L service providers has assured more flexibility and then efficiency in responding to the increasing request. Then, the advanced solutions for automation applied in the warehouse have turned out to provide crucial benefits, replacing part of human work – occasionally undersized because of Coronavirus -, and particularly in the low value-added operations.

All these factors can change the relationship between the Industry and the Retail (may, it is already changed) and so also how Transport & Logistics will be requested to serve both of them. T&L companies are now asked for developing lean and more flexible models to effectively and quickly adapting themselves to completely unforeseen scenarios. In the most critical moments of the emergency, a better standing and answering came from those logistic systems in which the cooperation between all the parties (Industry, Retail, T&L providers) was effectively strong, targets and practices were shared, and all the efforts were joint. Thus, we will have to start again from the renewed awareness that choosing the right partners and building solid and lasting relationships can prove to be not only profitable but crucial for companies' business.



TAGS: Transportation, Aeolus perspectives, Logistics
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