The Impact of COVID-19 on Warehousing: 3 Key Trends

COVID-19 has significantly disrupted the global supply chain and directly affected companies involved in the storage of goods. The pandemic has also led to several major developments in the warehousing sector. This article looks at some of these developments which are likely to have lasting impacts on warehousing.

A key feature of the current crisis has been the volatility of supply and demand across the globe. For example, many parts of Asia began to emerge from lockdown just as the crisis peaked in Europe and the US. This situation led to severe undersupply of some goods while other producers were left with significant surpluses. At the same time, COVID-19 has become a catalyst accelerating several key trends in warehousing including:

1. Increasing demand for warehousing space

Uncertainty created by the pandemic is likely to cause increased demand for additional storage as suppliers seek to build up safety stock to protect against future shocks. 

Due to the persistent nature of the crisis, firms may decide to increase their inventory levels in the long term. In turn, this will boost demand for warehouse space and depots for storing, picking and packing. This trend will be especially relevant for high-value and high-turnover goods.

2. Increasing role of automation and robotics

The automation of warehousing facilities is a longstanding trend likely to be accelerated by COVID-19 and the threat of future pandemics. With health experts warning that social distancing measures will remain in place until at least 2021, warehousing companies all across the globe are already turning to automation to maintain social distancing and reduce the number of staff working on-site. 

In the longer term, this outbreak and the anticipation of future shocks may speed up the use of automation and robots in operations. This will require investment in technology as well as infrastructural investment to redesign warehouses.

3. Outsourcing of warehousing services

Outsourcing has become a major trend in the global supply chain over the last 20 years. In fact, about 80% of non-core functions in the supply chain are currently being outsourced as it enables companies to focus on their core competencies and be more competitive.

The pandemic has exposed the fragility of current supply chains and created intense budgetary pressures. Therefore, it is likely that companies will increasingly engage third-party logistics specialists rather than investing in their own distribution networks. With so many businesses currently seeking to streamline their staffing and operations in the event of economic decline, the industry trend towards outsourcing of warehousing services is likely to intensify.