After the Covid Storm: A New Logistics Era

The Coivd-19 crisis has forced the logistics industry to make quick and decisive changes. Now, as the world moves into the post-Covid era, it is high time to ask which of the solutions introduced during the crisis will remain in use. Logistics managers at international transport and logistics company AsstrA-Associated Traffic AG share their thoughts on "what clicked in logistics".

“On the 5th of May, the World Health Organization announced that it was ending the emergency it declared for Covid-19 more than three years ago. It is a good moment to reflect on how the transportation industry has changed over recent years. The uncertainty caused severe economic upheaval, erasing trillions from GDP, disrupting trade, and shattering businesses. However, when we concentrate on logistics, some positive results have come out of the disruption. One is that the fundamental importance of the supply chain was recognized and prioritized, with the necessity of investments in technical capabilities – such as real-time visibility and resiliency – clearly understood. Also, Covid-19 forced supply chain participants to develop new agility to keep their business going. Many organizations, for example, started the process of building advanced analytics tools to perform dynamic SKU rationalization instead of running one-time spreadsheets as had been previously popular. COVID restrictions created shortage of transport capacity - supply dominated demand. As a consequence of all this, freight forwarders had to support customers with more creative solutions in such market shocks,” says Vladislav Lagun, CСO at AsstrA.

Significant change is possible thanks to technologies such as the Internet of things (IoT) devices, or sensors that provide valuable data on where goods are in the supply chain and their condition. Such products might include frozen foods or medicines for which temperature monitoring may be critical. Cloud-based control tower platforms like AsstrA Suppliers’ Portal have also gained popularity as solutions for overseeing and exchanging information among suppliers and other supply chain participants.

“The pandemic made some changes in our mind. Firstly we started to understand how important is to be in touch with customer‚ secondly how important it is to minimize human factor in delivery process - that is why we started to offer multimodal service with basis on rail delivery, and last but not least we need not to focus on one variant of delivering - we should go ahead with progress,” adds Mark Risenbreg, Integrated Solutions Manager.

The sea transport market has faced lots of difficulties within the last three years: the increasing rates on transportation made it unfavorable to import goods from China; falling demand and Covid restrictions created problems with stable production circle and trading.

“Global Ocean Freight situation shows softening of freight demand continues to put downward pressure on ocean freight rates. Sea freight rates have risen significantly during the COVID-19 period‚ climbing a 12-year high amid soaring global demand and supply chain delays. Thus‚ the maximum value of the Freightos Global Container Freight Index reached $10-11 thousand for a 40-foot container at the autumn 2021‚ having increased more than 7 times from its level at the beginning of 2020. From climbing to historical highs during the global pandemic‚ ocean freight rates have fallen away since the summer 2022. The Global container freight index in May 2023 is down more than 80% over the last year. Thus‚ now the Freightos Baltic Global Container Index shows that the market is at the level of early 2020: the average value of the index is $1,400-1,500 for 40-foot container,” underlines Elena Vysotskaya, Marketing Analyst at AsstrA.

Covid-19 accelerated preexisting issues in the supply chain and brought the importance of visibility, resilience, and digitization to the fore. In the past, cost reduction could be achieved through lean operations, longer lead times, and low-cost labor. Now, agility, visibility, automation, and upskilled people will be the keys to better decision-making and excellence across integrated supply chain workflows.