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Monday, 26. October 2020

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Transport logistics in times of the Corona crisis

The year 2020 will go down in history as a crisis year with significant declines in turnover, which will also affect European freight transport. The long-term effects of the Corona pandemic are not yet foreseeable. When analysing the situation, however, one should bear in mind that logistics forecasts were already pessimistic before Corona, as studies by PwC and BGL show. And like every crisis, Corona also reveals opportunities and potential – especially in the area of digitalisation.

In recent decades, it has rarely been possible to identify a single cause for economic downturns and rising unemployment. This is especially true in a globalised economy, where the interrelationships are hard to keep track of. The Corona pandemic, however, has set new standards here; it is without doubt the main cause of the current global economic crisis.

The virus is a significant contributor to the extent and speed of the recession. The high risk of infection and the treacherous ways of transmission lead to drastic losses in turnover in some sectors of the economy such as gastronomy, tourism, the hotel industry or aviation. Due to the renewed dynamic development of infection figures since the beginning of autumn, it must be assumed that the situation in these sectors will continue to worsen.

Decrease by 8.6 per cent

The European transport and logistics industry is also affected by the corona crisis. According to calculations by the auditing and consulting firm PwC, gross value added is expected to decline by 8.6 per cent in 2020. The industry will only recover slowly and in a so-called U-scenario, according to the “Transport and logistics barometer”, an analysis published by PwC in July. A recent study by the consulting firm McKinsey & Company also shows that the fear of insolvency in the transport and logistics sector is increasing due to Corona.

Bild: iStock (welcomia)

Already declining before Corona

The economic analysis of the Federal Association of Road Haulage, Logistics and Disposal (BGL) is equally pessimistic. However, it also states that the business situation in the transport logistics industry was already declining long before the Corona crisis. This was the result of a regularly conducted survey by the industry association in which 266 transport companies participated. According to the survey, turnover was already declining in the fourth quarter of 2019.

The business situation balance, one of the most important measures of the economic situation of companies, fell to a value of minus 25 per cent, according to the report. The forecast values for the first quarter of 2020 were also “clearly negative” even before Corona. Even then, 32 per cent of respondents were pessimistic about the first half of the year. And in all other areas, too, the BGL attests to the “worst value in almost seven years”.

The economy has demanded attention for a long time

This clearly shows that Europe at least was already sliding towards a (mini-)crisis in 2019, even without a pandemic. After about ten years of economic recovery in Germany, this was not surprising. In view of the continuing boom, economists were already puzzled by the incessant buzz of the economic engine.

Those who had previously relied comparatively heavily on customers from the automotive sector as transport companies and logistics service providers were now hit particularly hard by Corona. The discussions about climate change and real driving bans in the inner cities had already robbed many drivers of their desire for diesel and petrol cars. Due to the lack of electrically powered alternatives and a reliable charging infrastructure, German premium manufacturers are currently losing many customers to Tesla, which is the only car manufacturer to remain in the black even during the crisis.

For many, the need for digitisation only became apparent through the Corona crisis.

Opportunity in the crisis

But even with a balanced customer portfolio, 2020 will be a difficult year for logistics companies because, with a few exceptions, demand is crumbling across the board. “The question now is how quickly and sustainably the industry can recover. Digitalisation and innovations will play a central role in this,” emphasises Ingo Bauer. The head of transport and logistics at PwC Germany expects the crisis to have some lasting effects on the industry.

For many, the Corona crisis made the necessity of digitalisation visible. The safety distances at the workplace alone can usually only be met with a large number of home offices. Modern transport management and telematics systems form the basis here for even being able to send dispatchers home. Last but not least, this freedom also increases the attractiveness as an employer.

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Conclusion

Even without the Corona pandemic, many transporters would suffer from a drop in turnover today, but the extent of the pandemic has increased the latent problems many times over. At the latest now, work should be done on consistent digitalisation to make one’s own company future-proof.