09 Oct 2020

INFLUENCE OF COVID-19 ON LOGISTICS

As the COVID-19 pandemic unfurled across the globe, people had to adapt to the situation in order to minimize the spread of the virus. These preventive measures have inevitably affected the global shipping network, as 90% of trade travels by sea.

Key shipping challenges caused by coronavirus:

Some of the challenges faced include restrictions on movement and increased safety measures at ports — leading to delays and congestion. Many cargo ship found themselves stranded at sea due to quarantine regulations. In addition, the pandemic has also intensified the risks of cargo damage as port closures have inevitably been accompanied by cargo handling firms being severely understaffed.

Parallel to this, there have been major swings in consumer demand for certain products, while halting of production in some regions lead to shortages for various goods, including PPE and medical equipment.

The economic fallout from COVID-19 will be long-lasting. Global GDP growth is predicted to fall –4.9 per cent in 2020, according to the June 2020 report of The International Monetary Fund. As of now, shipping remains the most cost-effective means of transport for global trade despite the ongoing uncertainty. The pandemic has however meant that logistics providers have been forced to consider other transport routes — some, like air have encountered serious difficulties and resulted in rising costs while rail although slower has emerged as a reliable option in the current circumstances.

The rail renaissance

Before the pandemic rail freight accounted for just 18% of the cargo haulage sector within Europe. However, as flights were grounded and cargo ships stranded at sea, rail has emerged as a viable solution for the challenges posed by COVID-19. Rail freight made it possible to distribute vital medical supplies, food, and other raw materials within and across borders even at the peak of the pandemic and lockdowns.

What are the benefits of rail freight?

Railways turned out to be much more reliable than air and sea transportation, allowing the transportation of large amounts of cargo efficiently with low staffing levels. On top of that, the closed nature of a railway network also added to the safety of this mode of transport. Moreover, border closures and increased infection control measures led to major traffic jams, for example a 50-kilometre (31-mile) traffic jam on the Germany-Poland border (March). By contrast, railway border crossings remained open for vital supplies including food and medical products.

Rail providers and staff effectively rose to the challenge during the toughest moments of the pandemic to offer transportation solutions. During the pandemic, the punctuality of international freight trains increased from around 60% to between 80% and 90%. Thanks to the collective effort of the rail operators, some rail routes even increased their capacity during the pandemic (e.g. China-Europe).

On the way to recovery

Right now the global transport network continues to adapt to pandemic-related problems and the associated economic crisis. While the whole world is waiting for an effective vaccine for COVID-19 to be developed, all freight providers need to be flexible and to adapt to our altered reality. Logistics providers will also be required to develop innovative solutions to ensure vital supplies reach the right destinations at the right time to keep the global economy moving- be that by air, sea, rail or road.