The logistics industry was one of the best performing industries in the United States. Based on the report, the industry performed significantly in the period ending 2019 with 2.3% growth and contributing to the country’s increase in GDP to $21.43 trillion (Kearney, 2020). However, the industry’s performance has been influenced by the changing environments resulting from the impacts of the COVID-19. The pandemic has led to a significant change in consumer behavior, affecting inventory position and the entire supply chain in the industry. Most of the economies have been affected by the pandemic globally, supply of goods and services has dramatically been affected in the motor carrier industry. The changing business environments and customer behaviors affect supply and demand for services, causing the logistics industry and other stakeholders to rise to the challenge. Adopting new changes in the logistics environment is the fundamental aspect that enables businesses operating in the industry to survive.
Different sectors in the industry faced changes in costs and inventory. The cost of transportation increased by 2.5%, whereas the inventory reduced by 4.6 %. The change in the carrying costs resulted from a decrease in the weighted average cost from 7.0% in 2018 to 5.9% in 2019 (Kearney, 2020). In transportation service, costs increased in the motor; however, there was a decrease in rail transport in areas where the cost decreased as a result of declining economies. This decline in costs and volume of operations is significant evidence showing the impact of the pandemic on logistics in the industry. Different industries in the economy were affected, leading to a negative influence on the logistics industry, thus prompting the industry to adopt new changes to address the changes.
The pandemic caused a significant shift in shopping preferences; most customers considered shopping through online platforms, thus putting more pressure on logisticians. In addition, covid-19 lockdowns required the logisticians to shift into home delivery and other deliveries to meet customer expectations. As a result, the pandemic led to a drastic acceleration of demand on logistics services leading to a shift in regional supply chins (Kearney, 2020). To ensure balance in the changing environments ion supply chains, retailers are forced to use forward inventory deployment to allow localized logisticians to have flexible operations in urban areas. Motor carriers dropped significantly due to the pandemic because of the changing demand and other business environmental factors because few trucks enter the market.
Most of the giant retailers, including Walmart, are shifted to forward-deployed inventory. The pandemic highlights significant gaps in the industry’s supply chain. Most of the distributors in the industry serve their customers using similar assets of disruption, but they cooperate across different operational transportation platforms to save money on warehousing. The inventory cost increased by 6.6 % since most warehouse spaces became scarcer due to increased demand for warehousing (Kearney, 2020). The increase in demand for logistics due to eth pandemic put more pressure pf warehousing
The report explains the pandemic has changed customer preferences and expectations concerning service delivery, with many of them going for home delivery services. The change in customer behavior has forced many shippers to develop different strategies to minimize costs and meet customer expectations. Most of the successful players in the motor industry enhance their asset utilization, use product segmentation to address changing levels of customer service, and ensure minimum cost per package. This provides an opportunity for the leaders in the industry to gain new sources of value positioning in the omnichannel supply chain to gain more profits despite the challenges presented by the pandemic. The truckload cost increased by 1.3 % in 2019; however, the industry suffered from profitability issues due to market imbalance where they must negotiate for lower-cost secure capacity.
Conclusively, the pandemic presents both opportunities and challenges in the logistics industry. The changing conditions in the supply chain, including customer behavior, carriage capacity, and costs, affect the business. Although warehouse sing is a significant element in logistics and transportation of commodities, change in demand and supply is pressuring the warehousing, thus changing the cost in the entire supply chain. As a result, motor carriers need to adopt cost-effective ways of disruption to meet customer expectations and address profitability concerns.
Reference
Kearney. (2020). The State of Logistics Report
