What Can the Trade Industry Do During the COVID-19 Crisis?
The COVID-19 crisis has put many industries in survival mode. As China began shutting down in January, manufacturing throughout the world slowed to a near stop. As early as February, the shipping industry began to feel the full impacts of this shift. Reduced manufacturing and a reduced workforce led to substantial drops in exports from mainland China as well as reduced demand from China for raw materials.
Given the world’s strong reliance on Chinese-made goods, the shipping industry has been particularly impacted by the crisis. Further, as the virus spread and more ports and terminals around the world were impacted, the shipping industry felt even greater effects. As businesses look to survive this season, many are wondering what they can do to weather this storm. Amidst the great uncertainty, here are some things to consider, helping guide shippers through this crisis.
There is a need to keep the economy going and to keep globalization alive.
With ports operating on limited staff due to social distancing protocols and different countries experiencing varying impacts from COVID-19, it can be tempting to move away from globalization. That said, experts argue that it’s important to keep globalization alive, even now. While following all recommendations about limiting the spread of the virus, it’s important to keep ports, terminals, and distribution centers/warehouses open when possible. Instead of operating business during “regular business hours”, perhaps multiple work-shifts can be implemented. This will help to keep the economy going, enabling the shipping industry to serve as a lifeline, continuing to provide many essential products, throughout this pandemic.
This crisis will likely serve as a catalyst for increased technological advancements.
Another prediction from experts is that COVID-19 will lead to a digital transformation in the shipping industry as a way to decrease the impact of this type of crisis, increase resiliency, and increase companies’ ability to handle large disruptions to supply chains. In an effort to do this, there will likely be substantial investment in freight technologies, AI, and data analytics. Given this likelihood, now is the time to make those investments to stay competitive and to lead the industry.
Diversification is Important.
Another likely long-term effect of this crisis is an increased awareness of the risks of sourcing all supplies from one country or region. When things settle, many companies will be looking to diversify their supply chain to better be able to handle crises in the future. With that in mind, businesses should look for suppliers and manufacturers in various countries and continents in case if supplies from one country/continent has been blocked, there is a back up plan to keep the business running.
The next few weeks and months promise to be challenging and filled with uncertainty. That said, being proactive and thinking about long-term solutions and plans during this time can help to position your team to handle the volatility, emerging from it stronger than ever. As always, ClearFreight is here for you. Contact us one of our logistics and supply chain experts today and see how we may assist with your business.